Underwriting update – Friday 2nd May 2008
We have today made the following changes to our lending criteria which are effective immediately:
The following products have been withdrawn:
Self Build mortgage
Semi commercial
Buy to Let for Overseas Landlords, including Ex-pats
Buy to Let – student purchase
Buy to Let for Limited Companies
Changes to Buy to Let
The maximum is now 75% LTV
We will no longer accept applications for HMOs
Affordability - we no longer accept earned income
Affordability – rental cover must be 125% at pay rate
No FTB landlords.
Other changes
The maximum LTV is now 75% on our Status product.
We no longer accept new build property on any products.
Maximum loan size - 15th April 2008
We are introducing of a new maximum loan size of £250,000 on all our mortgage products effective from Thursday 17th April 2008.
If you are preparing an application for a loan above £250,000, it must be received at our office together with the correct application fee by close of business on Wednesday 16th April in order to be considered.
Product Range Update – 3rd April 2008
We have today made the following changes to our lending criteria which are effective immediately:
Applicable to all Products
We have introduced the following residency requirement:
Applicants must be UK residents – British citizens normally resident in the UK or Non British citizens with permanent rights to reside and work in the UK.
This applies to all products except Buy to Let for Landlords Living Abroad which is specifically designed for ex-pats.
We have introduced a minimum property value of £75,000 for most products, although some have a higher minimum, see our product guides.
All Buy to Let
We will only accept applications on Houses in Multiple Occupation (HMOs) that meet the following criteria:
A property with no more than 8 rooms suitable for letting to private individuals on separate assured shorthold tenancies.
Minimum property value £250k
Property must be on one title and be licensed by the Local Authority prior to completion.
Lending on HMOs will be subject to a maximum LTV 5% lower than the normal LTV limits. The arrangement fee and interest rate, including the reversion rate, will be increased by 0.5%.
Buy to Let for Landlords Living Abroad
We will no longer accept applications from foreign nationals living abroad.
We continue to accept applications from ex-pat British nationals but at a revised Max LTV of 75%.
Buy to Let for Limited Companies
We have introduced a minimum loan size of £250,000.
We will only accept special purpose off-shore limited companies where the directors are UK resident.
Self Cert
The maximum loan to value is now 75% LTV on all Self Cert rates.
Property Development Finance
This product is no longer available via Mortgages.
Product Guides
We will update our range of product guides to incorporate these changes shortly.
Maximum LTV now 80% - 26th March 2008
With effect from Wednesday 26th March 2008 we are reducing the maximum loan to value to 80% on Buy to Let, Self Cert and Full Status products.
Buy to Let Rental Assessment
With effect from 3rd April 2008 we will using a single notional rate of 6.75% when assessing rental cover on discounted or LIBOR linked products. With our fixed rates pay rate will continue to be used.
We will no longer be accepting applications on new build flats - 17th March 2008
In February, following a review of our lending policy, we advised you that we had amended our lending criteria in connection with new build flats. We took this step because we had concerns surrounding the difficulty in establishing the real purchase price and as a result the valuation of these types of property in some circumstances.
Other lenders clearly have had similar concerns and we have seen many of our competitors restrict this type of lending. The impact of this has been that, despite the recent changes we made, we are continuing to receive increasing numbers of applications on new build flats. While we aim to be a flexible lender we also have to manage risk. At present we are receiving a disproportionate amount of business on new build flats.
As a result we have decided that, with effect from Thursday 20th March 2008 we will no longer accept applications on new build flats on any of our mortgage products. While we do not necessarily see this as a permanent change to our lending criteria it will apply until further notice.
If you are preparing an application on a new build flat it must be received at either our office or at the office of one of our approved packager partners together with the correct application fee by close of business on Thursday 20th March 2008.
Definition of new build flat
A purpose built flat, completed within the last 12 months, on either:
- a brand new development, or
- a conversion of property with previous non-residential use, or
- a large scale conversion on a scale similar to a new development
and which has never been occupied.
We continue to be happy to consider applications on small scale conversions. Please contact one of our experienced underwriters if you wish to discuss a case.
Discounts on Purchase Price - 22nd February 2008
Discounted Purchases for New Build Houses
Existing criteria: We can accept applications for up to 95% of the discounted purchase price. The overall LTV cannot exceed current normal LTV limits.
Change to criteria: We are no longer able to accept transcribed valuations for this property type.
Discounted Purchases for New Build Flats
Existing criteria: We can accept applications based on the discounted purchase price of new build flats.
Change to criteria: We shall reduce overall maximum LTV by 5% from our normal published criteria. The overall LTV cannot exceed these revised LTV limits.
We are no longer able to accept transcribed valuations for this property type.
We will not accept applications on new build flats from first time buyer landlords or overseas residents.
Discounted Purchases on Second Hand Properties
Existing criteria: We can accept applications for up to 95% of the discounted purchase price. Vendors or gifted deposits or BTL portfolios at below value can be accepted. The overall LTV cannot exceed current LTV limits.
Change to criteria: We need to know the reason for the discount, and receive evidence of it.
Discounted Purchases on Second Hand Properties - Sale and Leaseback
Existing criteria: We are unable to accept applications on property where there is a sale and leaseback arrangement. The Vendor may not occupy the property after the sale of the property has completed.
New Build Property
Valuations on New Build Flats
Existing criteria: We (or our packager partners) instruct our Surveyors to value the property on the following basis –
1. As a new build flat
2. A second hand resale (open market valuation) basis.
Lending will normally be based on the new build valuation but our underwriter can take the second hand open market valuation figure into consideration as part of their holistic review of the application. We reserve the right to seek additional information should we have concerns.
Remortgages for New Build Flats or Houses
Existing criteria: For BTL applications, proof of rent is required e.g. bank statements showing rental credits. On this basis we shall lend against our normal LTV limits.
Change to criteria: Remortgages for new build flats or houses will now only be acceptable after the property has been owned by the mortgagor for at least 6 months. A fresh valuation will be instructed by Heritable Bank (or our packager partners)
Further Advances for New Build Houses / Flats
Existing criteria: We can only accept applications after 6 months in ownership when normal LTV limits and criteria will apply.
Application Fee scale
Following a recent internal review, we have rationalised the assessment element of our application fee scale which is now £250 on all property values. This results in the overall fee increasing by £50 on properties with a value up to £500,000. The fees for properties valued at £500,001+ remain unchanged.
Purchase price or value
(whichever is higher) |
standard application fee* |
including homebuyers report* |
| Up to £100,000 |
£375 |
£580 |
| £100,001 - £150,000 |
£400 |
£625 |
| £150,001 - £200,000 |
£440 |
£680 |
| £200,001 - £300,000 |
£465 |
£750 |
| £300,001 - £400,000 |
£515 |
£855 |
| £400,001 - £500,000 |
£565 |
£975 |
| £500,001 - £600,000 |
£665 |
by negotiation |
| £600,001 - £700,000 |
£765 |
by negotiation |
| £700,001 - £800,000 |
£865 |
by negotiation |
| £800,001 - £900,000 |
£925 |
by negotiation |
| £900,001 - £1,000,000 |
£990 |
by negotiation |
| £1,000,001 - £1,500,000 |
£1130 |
by negotiation |
| £1,500,001 - 2,000,000 |
£1270 |
by negotiation |
| £2,000,001 - £2,500,000 |
£1470 |
by negotiation |
| £2,500,001 - £3,000,000 |
£1670 |
by negotiation |
| £3,000,001 + |
by negotiation |
by negotiation |
*The total amount payable includes a non-refundable £250 assessment fee.
For semi-commercial applications, please contact us to obtain the appropriate application fee.