Our Lending Criteria Guide

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0333 321 1000

aldermore.co.uk/resi

This guide is a general guide to our full lending policy. If more details are required please contact us. © Aldermore Bank PLC. Aldermore Bank PLC is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. (Financial Services Register number: 204503). Registered Office: 1st Floor, Block B, Western House, Lynch Wood, Peterborough, PE2 6FZ. Registered in England. Company No. 947662. Telephone calls may be recorded or monitored for security and training purposes. ARM56-615-400053

FOR INTERMEDIARY USE ONLY

Our Lending

Criteria Guide

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Loan

Residential Buy to Let

Purpose

Purchase transactions involving a property that was previously sold within the last 6 months are not acceptable.Purchase or Remortgage*

*(Remortgage not available on Help to Buy: mortgage guarantee)

Term

Minimum 10 years Maximum 35 years

Minimum loan

Minimum £25,000

Maximum loan and LTV

Maximum £1,000,000 to 75% LTV £400,000 to 85% LTV

*(Maximum £400,000 to 95% LTV on Help to Buy: mortgage guarantee)

Maximum £1,000,000 to 70% LTV £600,000 to 75% LTV £400,000 to 80% LTV

Credit status

Mortgage Arrears

None in last 1 year

CCJs / Defaults

None in last 3 years (CCJs & Defaults over 3 years considered)

Bankruptcy / IVA

Satisfied for 6 years

Repossession

Not Accepted

Repayment method

Repayment types accepted

*(Interest only is not available on Repayment or Interest only

Help to Buy: mortgage guarantee) Repayment or Interest only

Part Repayment & Part Interest only

Not accepted

Interest only maximum LTV

75% LTV 80% LTV

Interest only proof of repayment plan

Proof of repayment plan and Interest only declaration form required.

Where sale of residential property is the repayment plan, a minimum £150,000 equity (£250,000 in London and the South

East) is required at the start of the mortgage. Sale of main property cannot be combined with another repayment plan. (For a definition of London and the South East area, refer to the

last page of the guide).

Proof of repayment plan is not required. Sale of property is acceptable as a suitable repayment vehicle.

Direct Debit

Payments to the mortgage account are to be made monthly by Direct Debit from a bank account in the applicant’s name. Direct Debit _{mandates in limited company names are not acceptable.}

Deposit

Builder or vendor deposits

Not accepted.

Other sales incentives provided by the

house builder

Acceptable if they relate to the payment of legal costs and stamp duty. The inclusion of white goods / floor coverings / curtains / blinds and the upgrade of kitchen / bathroom in the sale of new build are also acceptable. The maximum value of the sales incentive should

not exceed 5% of the purchase price.

*(Builders incentives / part exchange deals are not accepted (with the exception of white goods, carpets and curtains) on Help to Buy: mortgage guarantee).

Family gifted deposit

Full gifted deposits are acceptable from close relatives including step relatives. (A close relative is defined as a spouse, parent, grandparent, sibling, or child).

A letter must be provided by the Solicitor acting in the mortgage transaction confirming that the gift is non-repayable and that no charge will be registered on the security property.

Evidence of deposit

When submitting proof of deposit ensure that:

• Evidence is provided in the form of bank or building society statements or pass book in the applicant(s) name • Any documentation provided is supplied in its original form without any kind of blanking out or alteration

• The documentation shows that sufficient funds are available, how the deposit has been built up and any lump sum transactions are explained

• Proof should be recent i.e. dated within the last 3 months (12 months in the case of ISA’s or other annual interest types of accounts)

Remortgage

Remortgage period

Remortgaging out of bridging finance provided by other lenders will be on a pound-for-pound basis only and capital Remortgages within the first six months of the original purchase date are not normally acceptable. raising will not be available.

Remortgage of an Aldermore bridging loan

onto an Aldermore term product

n/a

Where an Aldermore Bridging loan exits onto a term product: • It will be free from the normal 6 month ownership rule (if held for

at least 1 month).

• Capital raising in excess of the original bridging loan will be considered on any uplift in value confirmed by the original Surveyor, subject to scheme limits.

Remortgage purpose

Remortgages will be considered for any legal purpose, although capital raising for business purpose is limited to 75% LTV._{*(Remortgage not available on Help to Buy: mortgage guarantee)}

The following details Aldermore’s main criteria and is designed to help you understand the type of business we will consider.

*Note: Criteria may differ for Help to Buy: mortgage guarantee see below.

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Transaction

Inter family sales, Purchase at Under Value

and Deed of Gift

Only considered when the property is being purchased from a close relative (A close relative is defined as a spouse, parent,

grandparent, sibling, or child).

The vendor must not reside in the property after completion. The maximum loan will be based on purchase value and limited to a maximum of 75% of the market valuation and no more than

95% of the purchase price (with applicant to provide 5% deposit).

Inter family sales, Purchase at Under Value and Deed of Gift not accepted.

Transaction types we do not lend on

Assignable contracts, new build transactions with a bulk off plan discount, Right to Buy (RTB) purchase, remortgage of a Right to Buy (RTB) property within pre-emption period, properties which are being bought from the applicants own limited company, Homebuy scheme, Key Worker Grants & Assisted purchase schemes, shared ownership purchase scheme and power of attorney.

Applicants

Maximum applicants

2

Minimum age

21 years 21 years (first time landlords 25 years)

Maximum age

(the maximum mortgage term cannot extend beyond the stated 70 years at end of mortgage term

retirement date) 85 years at end of mortgage term

Married applicants

Applications must be in joint names where an applicant is in a _{legally sanctioned relationship (i.e. married or in a civil union).} BTL applications can be accepted in sole names regardless of _{marital status.}

Mortgage / secured loan conduct

Proof of last 12 months mortgage payments required on the _{residential mortgage and 50% of the mortgage portfolio.} Proof of last 12 months mortgage payments required on 50% of the _{mortgage portfolio.}

ID and Residence

Summary

Aldermore uses an electronic identity verification system to check application data against a variety of public databases.If electronic verification does not pass the expected threshold proof of identity and residency will be required. Gaps in the voters role will be investigated to ensure 3 years address history is covered.

Proof of ID acceptable documents

• Valid UK Passport

• Valid UK Driving Licence – Photo card (Full or Provisional) • Valid Non UK passport or National ID Card

• HM Forces / Police Warrant Card • Firearms certificate or shotgun licence

• Identity card issued by the Electoral Office for Northern Ireland • HM Revenue & Customs correspondence - relating to current tax year Ensure that the documentation is:

• Valid and in date

• Certified as a true copy (and likeness if photo ID)

• Signed and dated by an approved certifier (FCA/PRA authorised introducer or a professional person covered by Anti Money Laundering Legislation (AML) with their name printed)

Proof of Residence acceptable documents

• Utility bill • Full driving licence • Bank or credit card statement • Latest Council Tax bill

• Current HM Revenue & Customs demand or notice of coding Ensure that the documentation is:

• Valid and in date (statements and utility bills must be no older than 90 days old) • Certified as a true copy (and likeness if photo ID)

• Signed and dated by an approved certifier (FCA/PRA authorised introducer or a professional person covered by Anti Money Laundering Legislation (AML) with their name printed)

Nationality

UK and EU Nationals

Applicants must be UK or EU nationals and have been continuously resident in the UK for the last 2 years. _{Ex –pats and applicants with diplomatic immunity are not accepted.}

Non UK and EU Nationals

We can consider non-UK and EU nationals providing they have been resident in the UK for the last 2 years and also have a non conditional and permanent right to reside.

For applicants who are not UK and EU passport holders or do not have automatic permanent right to reside in the UK, please supply us with one of the following:

The applicant’s passport confirming identity along with the stamped page confirming permanent right to reside in the UK (the passport number should be identifiable on both pages) or a letter from the Home Office confirming permanent right to reside.

First time buyers (FTB)

Definition

A first time buyer (FTB) is defined as someone who has never previously owned a property.

Restrictions

Accepted with no restrictions Not accepted

First Time Landlords (FTL)

Definition

n/a A first time landlord is defined as someone who has not owned a _{Buy to Let property in the last 12 months.}

Restrictions and requirements

n/a

Maximum £600,000 loan to 75% LTV. Minimum age of 25 years.

Must own their current home and have 12 months satisfactory conduct where mortgaged.

If FTL does not have a current mortgage and there is no mortgage account conduct visible on the credit bureau, proof of property

ownership will be required.

Minimum income of £25,000 applies per application. In a joint application where one of the applicants is not FTL, a

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Affordability

Minimum income

_{(income will be verified, see income verification details below)}£10,000 (applicants must have a verifiable income source, see income No minimum income for existing landlords. verification details below).

Affordability

Affordability based income calculation.

Income (personal and/or rental) will be assessed to confirm the applicant’s ability to meet credit commitments and withstand

future interest rate rises.

Minimum rental coverage of 125% at the product pay rate or reversion rate (whichever is higher).

If rental cover is between 125% and 150% an additional stress test will also be undertaken, which may be met via rental income or surplus personal income after debt is taken into account. If cover

is initially at least 150% or if the loan fits on a capital & interest repayment calculator no stress test will be applied. Personal income

will be verified in all cases.

Login to the Aldermore application processing system to access affordability and rental calculators: aldermore.co.uk/login-centre

Employed

History

Minimum 12 months history (last 3 months in same occupation).

Document requirements

Latest P60 and payslips covering the last 3 months (or employers reference).

Acceptable income

guaranteed and regular overtime/bonus/commission, plus any allowable additional and acceptable income (see other income details Total gross annual income including basic salary, 100% of London weighting, 100% of shift allowance, 100% of car allowance, 50% of below).

Working for family

The company accountant will be required to provide an employment reference in addition to the standard employed income _{verification.}

Directors public limited companies

A director of a public limited company (or their direct subsidiaries) will be regarded as being an employee of the company for the _{purposes of employment and income verification.}

Self employed

Sole traders, partners, and sub contractors

2 years fully certified accounts, an accountant’s reference, or 2 years HMRC Self Assessment tax returns (SA302’s & Tax Year Overviews). Minimum trading period 2 years. Income will be derived from the net profit figures.

Directors private limited companies

Minimum trading period 2 years.

If the applicant’s shareholding is less than 25% they will be classified as being an employee of the company. If the applicant’s shareholding is 25% or more they are classified as being self employed and must provide:

2 years fully certified accounts, an accountant’s reference, or 2 years HMRC Self Assessment tax returns (SA302’s & Tax Year Overviews). Income will be derived from a combination of salary and dividends.

Partners in limited liability partnerships

(E.g. accountants, solicitors and architects) an employer’s reference from a senior partner or practice accountant can be accepted.

Accountants Qualifications

Aldermore will only accept accounts or accountant’s certificates from practitioners with one of the following qualifications: • Institute of Chartered Accountants (England or Wales) (ICAEW) can use the following letters: ACA & FCA

• Institute of Chartered Accountants (Scotland) (ICAS) can use the following letters: CA • Chartered Accountants (Ireland) (CAI) can use the following letters: ACA & FCA

• Chartered Association of Certified Accountants (ACCA) can use the following letters: ACCA or FCCA • Chartered Institute of Management Accountants (CIMA) can use the following letters: ACMA or FCMA • Association of Authorised Public Accountants (AAPA) can use the following letters: AAPA or FAPA • Association of Accounting Technicians (AAT) can use the following letters: MAAT or FMAAT

Other income

Secondary income

Income from a maximum of two sources can be considered.

Retired

Retired applicants must be in receipt of personal / company pension. Income will be verified via the latest pension statement or latest P60. State pension can be considered but only as a secondary income source.

Trust funds

Income from trust funds may be considered. Terms and conditions of the trust income will be reviewed to ensure availability.

Rental and investment

Accepted when supported by 2 years fully certified accounts, an accountant’s reference, or 2 years HMRC Self Assessment tax returns _{(SA302’s & Tax Year Overviews). Income will be derived from the net profit figures.}

Contract workers

Accepted where the applicant has been employed for a minimum of 13 months in the same line of business. References covering the 13 month period will be required which show continuous employment. Applicants should be in a current contract period with

confirmation of renewal, proof of which will be required.

Professional sports people

Where applicants are self-employed the standard policy relating to self employment will apply. However, if the professional sportsperson is employed on a contract they must have been playing or competing professionally for at least two years and the current contract must have at least 1 year still to run. Additional income earned from endorsements will be considered if this can be evidenced. For applicants who are coming towards the end of their professional career it will be necessary to provide a satisfactory explanation,

including supporting evidence, of how they intend to support the mortgage post career.

Income we do not accept

Applicants on commission only, temporary workers, agency workers, income from foster caring, seasonally based jobs (e.g. crop _{pickers/holiday reps) or piece-workers, state benefits including working family tax credits.}

Let to Buy

Definition

n/a Aldermore will not consider the financing of the onward residential Remortgage of existing residential property onto a Buy to Let. purchase.

Requirements

n/a

A copy of the new residential purchase mortgage offer will be required prior to completion.

In addition to the standard Buy to Let affordability assessment, applications will also be assessed to ensure applicants can afford capital and interest repayments on a ‘residential owner-occupied’ basis should the new residential property purchase not proceed.

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Portfolio

Aldermore portfolio

1 residential property only. Maximum 10 Buy to Let properties (plus 1 residential property), subject to a maximum total exposure of £2m with Aldermore Residential Mortgages.

Portfolio with other lenders

No portfolio limit.

Tenancy

AST period

n/a Assured Shorthold Tenancy (AST) for a period of between 6-12 _{months is required.}

Maximum number of individuals

n/a Up to 4 individuals (including students) are accepted on a single AST _{agreement. All individuals must be jointly liable for the rent.}

High value tenancy

n/a Where the rental income exceeds £100,000 per annum, Aldermore will require our own format tenancy agreement available on our website to be put into place.

Types of tenancy we do not accept

n/a Company lets, DSS tenants, letting to family members and HMOs.

Property

Location

England (including the Isle of Wight), Wales (including Anglesey) and mainland Scotland._{Properties in Northern Ireland are not accepted.}

Minimum valuation

£75,000

Maximum valuation

_{*(Maximum £600,000 valuation applies to Help to Buy: mortgage guarantee products).}No maximum

Tenure

Freehold (heritable title in Scotland) or leasehold (with 60 years unexpired at completion and 40 years at end of mortgage term).

New build houses

Accepted

New build and newly converted flats

_{*(Accepted up to 95% LTV on Help to Buy: mortgage guarantee)}Accepted up to 80% LTV Not accepted

Ex-public sector (i.e. local authority, housing

association, Ministry of Defence, etc.)

Houses accepted up to maximum product LTV limits Houses accepted up to 75% LTV Houses are subject to the following conditions:

• No outstanding pre-emption requirement to repay a proportion of the discount

• Valuer indicating that there is evidence of a meaningful level of private ownership within the estate • The property being of standard construction

Flats and maisonettes can be considered up to 75% LTV, subject to the following conditions: • Minimum property value of £150,000 (£200,000 in Greater London)

• No outstanding pre-emption requirement to repay a proportion of the discount • Maximum of 3 floors above the ground floor

• Secure communal access with no balcony access arrangements

• Valuer indicating that there is evidence of a meaningful level of private ownership within the estate • The property being of standard construction

Occupancy

Security property must be the applicants main residence. *(For Help to Buy: mortgage guarantee applications this must be the applicants only dwelling wherever situated and cannot have a personal interest in any other property including Buy to

Let or second homes)

Security property cannot be occupied or intended to be occupied by the applicant or a close relative (A close relative is defined as a

spouse, parent, grandparent, sibling, or child).

Property types we do not lend on

• Properties licensed as HMOs • Freehold flats or freehold maisonettes • Serviced flats/apartments

• Properties with restrictive covenants or saleability; e.g., retirement • Studio flats

• Flats in a property block with more than three floors above ground floor which does not have a lift. Note that top floor and attic can be considered as one floor, if they are part of the same flat.

• Mobile homes • Houseboats • Holiday lets • Self build properties • Prefabricated buildings

• Unrepaired and repaired PRC constructions

• Property listed as defective under the 1984 and 1985 housing acts unless rebuilt to NHBC standards and with appropriate guarantees • Wimpey No-Fines (if constructed prior to 1946 or bungalow or flat)

• Laing Easiform (if constructed prior to 1966 or bungalow or flat)

• Timber framed property that does not have a brick or “block and rendered” outer skin • Steel framed constructions except post-1987 construction within BBA or WIMLAS certification • Property in which high alumina cement has been used in the construction

• Live/work units

• Property with agricultural restrictions • Farms and smallholdings

• Property where a flying freehold exists and affects more than 15% of the total floor space • Property subject to a shared ownership deed

• For Buy to Let properties – where satisfactory tenant demand does not exist or the proposed security is considered unsuitable for private renting

• When we have greater than 20% exposure in a block of 5 flats or more

• Properties adjacent to restaurants/food outlets/public houses/launderettes are not normally acceptable • Properties with an anticipated lifespan of less than 25 years beyond the end of the mortgage term • Properties with no kitchen or more than 2 kitchens

• Properties with no bath/shower room

• Properties which have shared access where a relative of the applicant resides in the other property • Properties which have internal door locks and/or separate utility services

• Properties on which there are local authority grants outstanding

• Properties suffering progressive structural movement or movement which requires monitoring

• Properties that have been underpinned in the last 10years must have a 20 year guarantee from a reputable company warranting the works completed and this must be placed with the title deeds.

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Japanese Knotweed

If there is Japanese Knotweed present within the boundary of the property or neighbouring properties one of four categories will apply: • If category 1 applies no report or action is required unless recommended by the valuer.

• If category 2 applies each case will be reviewed on its individual merits, taking into account the valuers advice.

• If category 3 or 4 applies a full report and detailed treatment plan will need to be carried out by an appropriately qualified person who is a member of the Property Care Association. When treatment is required it must be carried out by a member of the Property Care Association, backed by a minimum 10 year insurance guarantee programme, and no mortgage funds will be released until the first part of the treatment programme has been undertaken. The guarantee must be property specific and transferable to subsequent owners and mortgagee in possession.

• If the valuer reports that the presence of Japanese Knotweed on the property or neighbouring land (e.g. very close to the boundary) is an unacceptable threat to the subject property the application will be declined.

New build properties

Houses built within the last ten years must hold an acceptable guarantee/ certificate. Acceptable guarantees/certificates include: • Build Assure

• Build Life Plans • Build Zone • Castle 10 (Checkmate)

• CRL (Construction Register Limited) • Local Authority Building Control (LABC) • NHBC certificate,

• Premier Guarantee • Zurich Municipal Policy

A certificate which states the property was built under the supervision of a person belonging to one of the following: • fellow or member of the Royal Institution of Chartered Surveyors (FRICS or MRICS)

• fellow or member of the Institution of Structural Engineers (F.I.Struct.E or M.I.Struct.E) • fellow or member of the Chartered Institute of Building (FCIOB or MCIOB) • fellow or member of the Architecture and Surveying Institute (FASI or MASI) • fellow or member of the Association of Building Engineers (FB.Eng or MB.Eng)

• member of the Chartered Institute of Architectural Technologists (formally British Institute of Architectural Technologists) (MCIAT) • an architect registered with the Architects Registration Board (ARB). An architect must be registered with the Architects Registration

Board, even if also a member of another institution, for example the Royal Institute of British Architects (RIBA) • fellow or member of the Institution of Civil Engineers (FICE or MICE).

In addition to the above qualifications, at the time the certificate of practical completion is issued, the consultant must have

professional indemnity insurance in force for each claim for the greater of either: the value of the property once completed; or £250,000 if employed directly by the borrower or, in any other case, £500,000.

Fees

Completion and electronic transfer fees can be added to the loan up to 80% LTV. Fees will be automatically deducted on products above 80.1% LTV. Where fees are added they will be excluded from the LTV calculation but will be included in the affordability assessment. Fees added to the loan will attract interest over the mortgage term.

Solicitors

Aldermore Panel

England & Wales: Must have a minimum of 4 partners in the firm, must be registered on the Law Society of England & Wales

(website: www.lawsociety.org.uk), must hold the Conveyancing Quality Scheme (CQS) accreditation and subject to acceptance onto the Aldermore panel.

Scotland: Must have a minimum of 3 partners in the firm, must be registered on the Law Society of Scotland

(website: www.lawscot.org.uk/wcm/lssservices/find_a_solicitor) and subject to acceptance onto the Aldermore panel.

Separate legal representation

nominated Solicitor. Applicants can choose to use the same Solicitor and benefit from competitive conveyancing costs, or take Aldermore will require legal representation on loans above £400,000 (£600,000 in London and South East England) through its independent legal advice

Free legal fees

Aldermore currently offers free legal fees on all remortgages, through its nominated Solicitor and will pay for the costs of the legal work _{necessary to move the mortgage to Aldermore. Costs incurred for any additional work must be paid by the applicants.}

London and the South East area is defined below

Greater London: E (East London), EC (Central London), N (North London), NW (North West London), SE (South East London), SW (South West London), W (West London), WC

(West Central London).

South East: BN (Brighton), BR (Bromley), CT (Canterbury), CR (Croydon), DA (Dartford), GU (Guilford), HA (Harrow), HP (Hemel Hempstead), KT (Kingston upon Thames), ME (Medway), OX (Oxford),

PO (Portsmouth), RG (Reading), RH (Redhill),SL (Slough), SM (Sutton), TN (Tunbridge Wells), TW (Twickenham), UB (Uxbridge), WD (Watford).

FOR INTERMEDIARY USE ONLY