Residential Lending Guide

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Loan Size

Minimum £20,000 * Maximum £500,000* (*subject to product terms and conditions)

Mortgage Term

Minimum 1 year* Maximum 30 years* (*subject to product terms and conditions)

Repayment Type

Loan To Value (LTV)

Loan purpose Maximum LTV

Purchase 95% (within acceptable lending area which is within a 20 mile radius of a Leek United branch office)

Remortgage/Purchase (out of lending area) 90%

Capital raising 75%

Council Right to Buy 100% of the purchase price (excluding fees), up to 85% of the valuation for home improvements. (Estimates required and money retained)

Acceptable

Lending Limits

Loan Size Maximum LTV

Up to £175,000 95% £175,001 - £300,000 90% £300,001 - £350,000 85% £350,001 - £400,000 80% £400,001 plus 75% Acceptable

The maximum loan to value is calculated on the lower of the purchase price or valuation. If any incentives are being offered by developers or a vendor, these are deducted from the purchase price before the maximum LTV is calculated.

Deed of gift/purchase at undervalue acceptable from an immediate family member eg. parent, grandparent, brother or sister. Solicitors are to ensure the Society’s interests are fully protected.

No more than 2 residential mortgages per individual – Maximum 90% LTV on the main residence, 75% on the second property All loans must be secured by first legal charge on freehold or leasehold property. All second charges registered against the property would need to be repaid or postponed in favour of the Society’s loan/further loan.

Unacceptable

Capital raising for business, investment purposes or living costs, bridging finance/short term lending, purchase or remortgage of a property owned by applicant/s own business, self build, residential applications over 75% LTV with buy to let properties in the background which do not achieve a rental return of 125% of their monthly mortgage payments.

Higher Lending Charge

Where an advance exceeds 75% LTV of the purchase price or valuation of the property, whichever is the lower, a loan indemnity insurance will be arranged. The cost of this insurance will beborne by the applicant and can be added to the mortgage amount requested subject to product terms and conditions and affordability checks.

Scale Rate

Over 75% but not exceeding 80% LTV 2.65% Over 80% but not exceeding 85% LTV 3.34% Over 85% but not exceeding 90% LTV 4.24% Over 90% but not exceeding 95% LTV 6.36%

Property

Tenure

Leasehold, with a minimum of 50 years remaining on the lease at the end of the mortgage term.

Insurance

Every property in mortgage to the Society must be insured for the full buildings re-instatement value as a minimum requirement. Applicant/s arranging their own insurance will be charged a one off administration fee to cover the Society’s costs of providing a contingency insurance policy. This fee is currently £25 and is deducted from the advance. The Society can provide a quotation for home insurance, please contact us accordingly. Please note the details of the proposed buildings insurance policy are required before a formal mortgage offer can be issued. (Please see question 17 on the mortgage application form).

Property Valuation

A basic mortgage valuation is required by the Society and the cost is borne by the applicant/s as per the valuation scale. These are included in the Society’s ‘Mortgage Fees and Charges Leaflet’ - click here. The standard mortgage valuation is purely for the benefit of the Society to decide if the property is a suitable mortgage security. Should the applicant/s require a more in depth survey for their purposes, we can arrange a ‘Homebuyers’ report prior to instruction of the standard mortgage valuation, at an additional cost to the applicant/s. Please ask for further details.

Unacceptable

Any type of flats, maisonettes and houses converted into flats, system built properties registered under the Housing Defects Act 1984, flying freeholds over 25%, properties with residential or agricultural restrictions, properties adjacent or in close proximity to commercial premises, properties owned by current owner for less than 6 months, (unless inherited or part exchanged).

Acceptable Property Types

Standard construction, modern timber framed brick/block infill (post 1970), steel framed (built after 2000), flying freeholds up to 25%, land up to 1 acre (including gardens), thatched roofs, flat roofs (subject to satisfactory insurance). Properties with more than 1 acre are subject to referral. Properties built in the last 10 years with any of the following - NHBC, Zurich Municipal, Premier Guarantee, Architects Completion Certificate, Build Zone, Local Authority Building Control (LABC New Home Warranty).

Location

England (including Isle of Wight) and Wales

New Builds/Newly renovated or converted properties

Please provide a copy of the Council of Mortgage Lenders (CML) disclosure of incentives form with the application. This is required to evidence any incentives being offered to purchase the property by the developer. If there is a financial incentive, it will be deducted from the purchase price before calculating the maximum loan amount available. A copy of the form is available from the estate agent or the developers.

Auction Properties

Where a property is being tendered for sale through an auction, a mortgage application can be considered. The application is processed and if acceptable, the mortgage offer must be issued prior to the auction date.

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Applicant

Minimum age - 18

Maximum age – 75 at the end of the mortgage term or the elected retirement age, whichever is the earliest. Each applicant borrowing into retirement must independently support the loan on retirement.

Maximum number of applicants - 4. We will consider the two highest incomes onlyand assess for affordability. Two completed application forms are required and all four applicants are to sign the declaration page on both mortgage application forms.

Residency – The applicant/s must be either UK citizens, EU citizens or non EU citizens residing and working in the UK for at least 2 years, with permanent right to reside. (If applicable, we will require evidence of working in the UK covering 2 years in addition to payslips etc. such as an employment reference or P60). The Society will not lend to UK nationals who are not UK resident (ex-pats).

Identification - The Society will perform electronic ID checks. Where the applicant/s identity cannot be verified electronically, documentary evidence is required by obtaining one item from List A and at least one item from List B below:-

Status

A credit search will be carried out to assess the applicant/s credit history covering the last 2 years.

Credit cards, mail order and overdraft balances are calculated at 3% of the current balance outstanding and deducted from the useable annual income before calculating affordability.

Please ensure any student loans or child care vouchers are included on the application form, as they are usually deducted from the applicant/s salary at source, they can be omitted in error.

*NOTE - Non disclosure of current commitments is considered a fraudulent declaration and could lead to the application being declined. Please ensure all commitments are fully disclosed on the application form before submitting to the Society.

All mortgage accounts held in the last 12 months will require evidence of monthly payments from the credit report or bank/mortgage statements.

Income

Discharged/undischarged bankrupts or applicant/s with convictions, other than those which are spent under the Rehabilitation or Offenders Act 1974

Any prosecutions pending relating to any form of dishonesty such as theft, robbery, fraud or arson or which may have a bearing on the borrowers future employment

Previously declined application in the last 12 months (other than due to credit score or standard of the previous property)

Applicant/s have had a property repossessed Applicant/s offered voluntary surrender of a property Individual Voluntary Arrangements

Applicant/s who have taken out a ‘pay day’ loan within the last 2 years Acceptable

All mortgage and credit commitments must have been conducted satisfactorily. However, we will consider 1 CCJ or 1 Default of £500 or less, registered over 3 years ago, with no other adverse credit, and a satisfactory explanation provided – Maximum 75% LTV.

List A (proof of name)

Current UK Passport Current UK Drivers Licence / Card (not

provisional)

Benefit or Pension Book Armed Forces, Police, Fire or Ambulance ID Card Disability Badge, which includes a photograph

(Preferably Passport to be obtained)

List B (proof of address)

Bank/Building Society or credit card statement less than three months old

Utility Bill (gas, electric, telephone) less than three months old

Council tax bill

Latest BuildingsInsurance Renewal Notice Notice of Tax Coding

Vehicle Registration Document Medical Card

Building Society Passbook

Current UK Drivers Licence / Card (not provisional) Pension/Benefit Book

Employed applicant/s

The employment must be permanent and not subject to a probationary period or notice of termination. The last 2 months payslips and P60 are required.

If the payslips are internet generated, the last 2 months bank statements showing the salary credits are also required. An employment reference may be required and will be requested by the Society.

Self employed applicant/s

Must have been trading for at least 2 years. Income for lending purposes is arrived at by using the average of the last 2 years net profit. If the latest year’s net profit is lower than the previous, the lower figure will be used for calculation purposes. However, if profits are declining, please contact us.

Where the accountant is suitably qualified, an accountant’s enquiry letter is obtained by the Society.

The Association of Chartered Certified Accountants The Chartered Institute of Public Finance Accountants The Chartered Institute of Management Accountants

Where the applicant/s submits self assessment or the accountant is not qualified, the last 2 years SA302’s are acceptable. The Society reserves the right to request accounts prepared by a suitably qualified accountant if the size of the business is such as to warrant this or if we are not satisfied with any aspect of the above.

Contract work - please contact us for further details.

Agency work – unacceptable.

Working for Family – The last 2 payslips, P60 and last 2 months bank statements are required.

Maternity/Paternity Leave - Where an applicant is currently on maternity/paternity leave, this is acceptable subject to written confirmation from the applicant of his/her intention to return to work on a full-time/part-time basis. A satisfactory employment reference is also required together with anticipated child care costs.

Affordability

The Society uses a combination of income multiples and an assessment of affordability to demonstrate that an applicant can reasonably afford to repay their mortgage before we agree to enter into a regulated mortgage contract with them.

Please ensure all current commitments are deducted from the acceptable annual income before applying income multiples. Income multiples - 4.25 x single income or 4.25 x joint income. (We will allow up to 4 borrowers and will consider the two highest incomes only).

Cont’d…..

Acceptable Income

100% of basic annual income, regular dividends, pension income, car & large town allowances, housing allowances (police officers), placement income (foster carers) Teachers Learning Responsibilities (TLR). 50% of guaranteed overtime, guaranteed bonuses and shift allowances, maintenance (confirmed by court order or 6 months track record), secondary income (continuous 12 months).

Unacceptable Income Wages paid in cash Any type of benefits Any type of tax credits Commission

Investment income Regular overtime or bonus

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Affordability Assessment/Stress test – Applicant/s will be required to complete an income and expenditure statement (part of the application form) and the loan applied for will be stress tested using our current Standard Variable Rate + 1.5% on a capital and interest method of repayment over the mortgage term requested. Please see ‘Acceptable Income’ section for the figures which will be used for calculation purposes. If there is any other income shown on the wage slip apart from basic salary, or if the applicant is self employed and we are using a net profit figure, we will use www.uktaxcalculators.co.uk to provide us with a useable net pay figure. A surplus net disposable income must be evident on the income and expenditure assessment. As part of our initial enquiries, the Society will conduct a reasonability check of the completed income and expenditure assessment using information from the Office for National Statistics (ONS). It may be necessary for the applicant/s to provide bank statements or utility bills to evidence their expenditure. We suggest that you check through the last 3 months bank statements to ensure that the expenditure stated on the application form is a true reflection of your customers living expenses before submission of the same. If the Society is unable to confirm affordability through ONS and the stress test, the application will be declined.

NOTE – The lending guide is not the Society’s full responsible lending policy and therefore is not representative of our full lending criteria. Should you have any queries, or you wish to place an application with the Society, please contact the Mortgage New Business Team on 0845 2190250.