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A Selection of Buy To Let Mortgages Criteria

Buy To Let Mortgages Criteria 4

Buy To Let Mortgages Size

Minimum Loan: £25,001
Up to 75% Loan To Value: Maximum Loan £2,000,000
Up to 80% Loan To Value: Maximum Loan £1,000,000
Up to 85% Loan To Value: Maximum Loan £500,000

Maximum Aggregate Loan

Can exceed £20,000,000 for landlords with a property portfolio.

Loan Purpose

Will generally consider both purchase and remortgage applications but it is important to refer to each scheme for any exceptions.

Remortgage

Where the applicant(s)/Company has been the registered owner(s) of the property for less than 6 months at the time of submission of the application, any advance will normally be based upon the lower of purchase price or current valuation. Exceptions will be considered where it can be demonstrated, that since the date of purchase, significant improvement works have been carried out or where the application is being considered under the Limited Property Refurbishment scheme.

Mortgage Term

Minimum: 5 Years Maximum: 30 Years

Repayment Methods

Interest only, capital and interest repayment and part interest only and part capital repayment loans are available.

Rental Income Requirement

For applications based purely on the gross rental income from the property, the rent must normally equal or exceed 125% of the interest only mortgage payment, calculated at the mortgage lenders given rate. This rate will be reviewed regularly, and details of the current rate can be requested.

Professional Landlord

Where the applicant owns three or more let properties and is able to submit 3 years rental income accounts, then the maximum loan available may, at the lender’s discretion, be assessed on the basis that the gross rental income equals or exceeds 125% of the interest only payment, calculated at the Mortgage Lenders given rate. The Professional Landlord will be expected to qualify for the Forward Buying Facility (see below).

Portfolio Applications

Where the applicant owns three or more let properties and has more than 12 months lettings experience, then the maximum loan may, at the lender’s discretion, be assessed on the basis that the gross rental income equals or exceeds 125% of the interest only payment, calculated at the Mortgage Lenders given rate. The Portfolio Landlord may qualify for the Forward Buying Facility (see below). Normally 3 years accounts will be required to evidence the performance of the letting business, unless secondary income can be evidenced.

General

Applications will be considered for up to four individuals who should normally have been resident and liable to tax in the UK for a minimum of 3 years.

Age at Application

Minimum: 21 years and Mortgages should normally be repaid by retirement age unless evidence to service the loan beyond this age can be demonstrated.

Limited Companies

We will lend to Limited Companies registered and trading in England, Wales or Scotland, and directors who are resident in the UK for tax purposes. The Company must have been incorporated for the principal purpose of buying and holding residential investment property.

Full personal guarantees must be available from all the directors (maximum of 4) on a joint and several basis. We reserve the right to request full personal guarantees from significant shareholders. Accordingly, the expression “applicant(s)” should, where appropriate in these guidelines, be interpreted to also mean guarantor(s).

Credit History

A comprehensive review of the credit history for each application will be undertaken which will include a credit search on all applicants. Will not normally consider any application where there is evidence of poor credit such as county court judgments, defaults or arrears on any loan.

Employment

Where there are more than two working applicants, the two higher incomes will normally be taken into account in assessing the maximum loan available.

Employed applicants must be in permanent non-probationary employment. We will consider long term contract work on an individual basis. Up to 50% of guaranteed or regular overtime or bonuses may be considered provided the amount does not exceed 20% of the applicant’s total income.

Self Employed Individuals who work on a subcontract basis will be treated as self employed.An applicant will be classed as self employed where the individual owns 20% or more shareholding of the company or is employed by a family business. Applicants must have been trading in their present business for a minimum of 3 years. Normally an average of the last 3 years income will be used to assess the maximum loan available.

Forward Buying Facility

We can underwrite Professional and Portfolio Landlords to include their future plans and provide them with a written facility to cater for these needs.
General criteria and submission requirements will apply. Where the facility together with any existing lenders borrowings exceeds £1million the following will also be required:-

Three years rental accounts
Summarised Business Plan
Statement of Assets & Liabilities
Interview with Senior Underwriter (to take place at £2m or above)
Facilities are normally valid for 6 months. Subsequent applications received during this period will normally only be subject to the valuation of the property and credit search. Renewal or increase of the Facility will be subject to review and renewal of submission documentation.

Property

Will take a first legal charge and will normally consider most types of traditionally constructed residential property in England, Wales and Scotland.

Minimum Property Valuation

£50,000

Multi-Unit Property

We may consider, on an individual basis, lending on a single property divided into a maximum of 20 units. Properties will not be considered where more than 50% of the units are on long leases.

At the lenders discretion, and where considered appropriate, an investment valuation may be obtained. In such circumstances the property value must exceed £100,000 and the applicant must have at least 3 years experience as a landlord. For properties with up to 10 units a minimum value of £75,000 will apply. Where more than one purpose built flat which is capable of sale separately is held on a single title, the value of each individual unit must meet our minimum property value of £50,000.

Part Commercial Property

Applicants must have a minimum of 3 years experience as a landlord. We may consider as security, residential let property where there is a commercial element not exceeding 40% of total floor space of the whole property. An investment valuation of the property will be undertaken and the gross property valuation will be discounted by the notional value of the commercial element. The lender’slet property product criteria will then apply to the residential element of the valuation. The rent-to mortgage ratio will apply but income from the commercial letting may, where appropriate, be taken into account where confirmed as reasonable and marketable.

Let Property

Property may either be let on: (i) An Assured Shorthold Tenancy subject to a minimum term of 6 months and a maximum of 12 months OR (ii) To a Limited Company for up to 3 years or to a Local Authority or Housing Association for up to 5 years PROVIDED it is subsequently sub-let to a private individual. (iii) The property shall not in whole or in part be let to or occupied by the applicant or any guarantor or any member of the family or associated subsidiary or parent company (as the case may be) of the applicant. Where a tenancy agreement pre-dates the completion of the loan then the solicitor acting will need to ensure that our interests are fully protected.

Property Exclusions

Property is unacceptable if it is: A freehold flat or maisonette in England and Wales, Designated as defective under any Housing Act, Subject to agricultural or other planning restrictions (See Part Commercial above), Subject to notice of mineral extraction, contaminated land or previous mining subsidence and landfill, A Local Authority or ex Council flat or maisonette, Built within the last 10 years without an NHBC Certificate or other acceptable guarantee, Non-traditional construction such as concrete or timber or where existing or possible structural defects are apparent, A Shared Ownership Property.

Types of property

May be considered on an individual basis; Residential Let Property where there is a commercial element not exceeding 40% of the total floor space of the whole property (see Part Commercial above). Properties with an element of “flying freehold”, Leasehold flats and maisonettes attached to or above commercial premises, Self-build properties, Flats in blocks over 4 stories high, Properties with restrictions on occupancy e.g. section 106 notice, Ex Local Authority Houses and Studio Flats.

Tenure

Freehold, Heritable Ownership or Leasehold in which case a minimum of 65 years must remain unexpired at the commencement of the mortgage and 40 years unexpired must remain at the end of the mortgage term.

Valuations

A security assessment and valuation report will be arranged by the Mortgage Lender to determine the suitability and value of the property. The Mortgage Lender reserves the right to accept or decline any individual property.

Occupation

Depending on the specific conditions of each loan, the property must either be occupied within 90 days of completion for let properties, or may remain vacant, subject to the terms of the insurance cover being complied with.

Applying for the Buy To Let Mortgage

In order to ensure prompt processing can take place the following information should be submitted with the fully completed application form, direct debit mandate and credit/debit card authority. Employed Applicants – most recent P60 or last 3 months payslips. Self Employed Applicants – the last 3 years accounts or tax returns.

Mortgage Statements

Covering the last 12 months for ALL existing first mortgages held or redeemed within this period, unless the loan payment profiles can be found on the credit search. For professional/portfolio letting applications, this requirement will depend on the number of let properties owned. As a general guide only, statements on the number of mortgages shown below should be submitted. These must be on those accounts with the highest balances outstanding and we reserve the right to request additional information.

Personal bank statements

For all applicants over the last 3 months. Proof that the last 3 months mortgage payments have been made. For professional or portfolio letting applications see Mortgage Statements above. Purchases, proof should be provided that the deposit funds are from the applicant’s own resources.

Let Property

Proof of rental income received by way of the last three years accounts or tax returns where available is required from existing landlords.

Limited Companies

The last 3 years final accounts of the company, where available. Company bank statements for the last 3 months, where available. Part Commercial Copies of the full commercial lease inclusive of plans, containing details of commercial usage must be submitted together with copies of the front pages of the residential tenancy agreements. Details of the commercial usage should be entered in the appropriate section of the application form.

Limited Property Refurbishment

Where limited refurbishment works are required, upon receipt of a full schedule of works, consideration may be given, at the discretion of our surveyors, to an assessment of the property at the improved value. At completion, up to 85% of the lower of the purchase price or unimproved value will be advanced subject to LTV criteria, with the remainder of the funds being released as a retention once the works have been carried out.

References

The following references are required and will normally cover the last 3 years.

Employed Applicants will need current employer and previous employer where applicable.

Self Employed Applicants will need Accountants reference by a qualified accountant from an approved professional body e.g. chartered, certified, AAT, AIA, CIMA and AAPA.

General

Lenders reference(s) on existing first mortgages held or redeemed within the last 12 months where mortgage statements and proof of recent payments have not been provided with the application.

Existing and/or previous landlords reference(s) where deemed appropriate. The Mortgage Lender reserves the right to request additional information or references such as bank/mortgage statements or a bank reference.

Solicitors

We will normally instruct the applicant’s solicitors to act on our behalf provided; The firm has a minimum of two partners, operates from commercial premises and has been in business for at least 3 years.

The solicitor acting holds a current practising certificate and is shown in the current edition of the Solicitors and Barristers (or Scottish Law) Directory.

In all cases, the lender reserves the right to instruct solicitors to act on our behalf only and any costs incurred will be the responsibility of the applicants whether or not completion takes place.

Property Insurance

Property insurance will normally be arranged through us unless we confirm that an alternative policy is acceptable or the freeholders have adequate cover in force under the terms of the lease. Full details of the competitive buildings and contents cover available will be forwarded to the applicants with the offer of loan.

Where property insurance is not being arranged through us, details of the alternative policy must be provided to confirm that comparable cover will be in force and our interest must be noted on the policy. In such instances, a contingency fee will be payable.

Properties

Whether or not insurance is arranged through us, it must be acceptable to our insurers on standard terms, that is, exclusions or increased excesses do not apply for certain events.

Information

Life Cover

Although the does not insist that a life policy is assigned to them, we strongly recommend that suitable cover for the amount and term of the loan is in place to provide adequate protection for the applicants.

LTV (Loan to Value)

In these guidelines, “value” when used with LTV, means for purchases, the lower of purchase price or valuation. However, see Loan Purpose & Remortgage Application(section 1) and Limited Property Refurbishment (section 9).

Mortgage Assessment

When we consider an application a detailed assessment of the following circumstances will be made so that an informed decision can be reached regarding the acceptability of the case. The applicant’s credit history, The type and length of employment or the viability of the applicants business and for let properties, the managing agents charges and maintenance costs. The income available is sufficient to support the loan and any other commitments that exist on completion. The suitability and value of the property.

Verification

The references obtained will be validated by us. New acceptable references will be required where completion has not taken place within 6 months.

A revaluation will be arranged by the Mortgage Lender, at the applicant’s expense, where the date of inspection for the Security Assessment and Valuation is more than 5 months previously.

Second Charges

A second charge is not normally acceptable.

Further Advances

Further Advances are generally available to borrowers on current and some previously available schemes, where the loans with the Mortgage Lender have been successfully maintained for a period of 3 months. As a general guide only, the minimum advance is £1,000 and the further advance plus current balance outstanding must comply with the scheme and lending guidelines applicable to the existing mortgage. Normally, a solicitor will not be instructed to act in the matter, although it is always advised to seek independent advice before taking on any financial commitment.



Buy To Let Mortgages Criteria 1
Buy To Let Mortgages Criteria 2
Buy To Let Mortgages Criteria 3
Buy To Let Mortgages Criteria 5

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