Lending criteria

If you answer yes to any of the questions below, unfortunately we will decline the application.

1. Are the applicant(s) unable to provide written confirmation of all types of income, which will be used in the application?
2. Is this a Buy To Let application?
3. Is this a Guarantor application?
4. Is this a Shared Equity application?
5. Are all the applicants unemployed?
6. Are any of the applicants under 18?
7. Will any applicant be over the age of 75 at the end of the mortgage term?
8. Will an occupier who is not an applicant on the new mortgage application be paying a lump sum towards the purchase of the property?
9. Will the applicant or their immediate family live in less than 40% of the property either on completion of the mortgage or at a later time?
10. If this a remortgage application, does the applicant currently not occupy the property?
11. Is this a type of property or loan that we do not lend on?

Also, has any applicant ever

1. Had a property repossessed by a Mortgage Lender?
2. Been Bankrupt or subject to an IVA?
3. Had a criminal conviction, unless the conviction is for a minor traffic offence, or spent under the Rehabilitation of Offenders Act 1974.?

    

Consideration of any application is primarily based on the customer’s ability to repay the mortgage loan. Calculation of the amount we will lend to an applicant is based on assessing affordability taking account of income, regular commitments and living expenses. 

Primary Income is permanent, reliable, regular and sustainable.  Secondary Income is income that, whilst not
permanent or guaranteed, is nevertheless regular and sustainable

An application will be deemed unaffordable (and will therefore be automatically declined) where either income multiples or levels of unsecured debt are too high. To ensure a realistic figure is used for affordability purposes the system will automatically use 100% of primary income and a maximum of 50% of secondary income, to calculate the net monthly income figures. The table below shows the income types considered.

Please note that applications will be subject to additional policy including maximum income multiples and debt:income ratios.

Income Types

Arrears in the previous 12 months are not acceptable.

Any applicant who has ever been bankrupt will be declined.

The following provides examples of the types of application that fall into our credit scores.

If a Full Mortgage Application has been declined for affordability reasons an appeal will only be considered if the applicant has a substantial Santander relationship which should consist of at least one of the following:

• a Santander or Alliance & Leicester mortgage with no arrears in the last 12 months.
• A well-conducted Santander or Alliance & Leicester current account that has been operated continually within agreed limits and showing salary credits for a minimum of six months.
• A Santander or Alliance & Leicester savings account with a balance of at least 3 months net earnings of all applicants in the last twelve months.

Regular expenditure items need to be included to assess affordability. To include:

• Loans and outstanding credit card balances
• Shared ownership rent
• Services charges
• Maintenance
• Student loans and
• cost of investments to be used to repay  interest-only loans

The minimum requirements for income validation are as follows:

Online payslips are acceptable.

If employment has started within the last 5 weeks a copy of the contract is required.

For self employed applicants and loans above £1 million the latest two year signed accounts are required. Where accounts are marked with a "going concern" qualification the application will be declined.

Where commission, overtime or bonuses are to be included, a cumulative Year to Date figure must be available on the payslip, or you must provide the latest P60.

For large loans, payslips will often not provide sufficient information, for example where bonuses form a large proportion of income, where bonuses are not paid, wholly in cash or where income is derived from more than one source.  If this is the case submit available evidence of income.

Applications over 90% LTV

Where an application has an LTV greater than 90% we require one month’s bank statements per applicant in addition to any income verification detailed above (online payslips are acceptable).

Additional documentation

Underwriters reserve the right to ask for additional information if deemed necessary to approve the application.

All cases are assessed on affordability.  Where affordability is demonstrated on the affordability calculator.

We may request proof of deposit for example if a First Time Buyer was putting down a large deposit.  We always require evidence of the deposit where it is £100,000 or more and is not coming from the simultaneous sale of a borrower's existing property.

We can accept deposits provided by gift or loan, but please record full details in the Notes section of Introducer Internet to include:

• provided by the vendor (unless an acceptable new build incentive from the builder/developer)
• protected by a Deed of Trust (or similar)
• the person providing it will be living in the property, but is not named on the mortgage
• there is a beneficial/equitable ownership/interest in the property.

An example of a suitable note would be:

“A gifted deposit of £x,xxx from (name of person and relationship to applicant). (Name of person) will not have any interest in the property nor protect the gift by taking a second charge”.

If the donor wishes to protect their gifted deposit by taking a second charge, we will accept this if the gift is only repayable on the sale of the property.  We will not accept a deposit if it is being provided by the vendor or if it is being protected by a Deed of Trust (or similar).

Not required unless requested specifically.

Not required unless requested specifically.

We require the affordability of the BTL mortgage to be assessed at the higher of (a) the actual monthly mortgage payment x 125% or (b) the mortgage balance x 6% (affordability rate) x 125%/12. Any shortfall must be added in commitments in the affordability calculator.

Where the existing residential property is being retained and let out, or if the applicant owns other rented property, we may be able to include some or all of the rent as Secondary Income:

• If the property is mortgage-free, the gross rent may be included as Secondary Income
• If the property is mortgaged, then we can accept as Secondary Income any gross rent in excess of the higher of (a) the actual annual mortgage payments x 150%, or (b) the mortgage balance x 6% (affordability rate) x 150%.

To consider this we require completion of the “rental income additional information form” available to download from the Literature section of abbeyforintermediaries.com.

We do not allow self certification of income.

Maximum of four applicants.

If the application includes a person who is going to be living in the property and they are also providing a lump sum towards the purchase, that person must be included as an applicant and appear on the mortgage.

If the application includes a person who is 18 and over who is going to be living in the property and is not on the mortgage, it is essential that this person postpones their rights to occupy the property in favour of Abbey by signing a Deed of Consent and Charge, which is on the back of the Mortgage Deed (Standard Security in Scotland).

Where there are two applicants

• Both primary incomes can be used together with 50% of any secondary income.

Where there are more than two applicants

• The two highest primary incomes can be used plus 50% of their secondary incomes, and 50% of primary and secondary income from the other applicants.

We will consider applicants on non-permanent employment contracts. Income will be treated as primary, subject to evidence of the following:

• Regular monthly income
• Continuous employment for the last 12 months
• Confirmation from employer of long-term employment arrangement, or
• Confirmation from reputable agency of secure further positions

We do not accept applications from customers with a criminal record (or where they are living with someone who has), unless the conviction is for a minor traffic offence, or is spent under the Rehabilitation of Offenders Act 1974.

Anyone aged 18 years or over (subject to status) with three years’ address history.

An application that meets certain criteria may be fast tracked, ie submitted without proof of income, to simplify the paperwork required to speed up the mortgage process. The AIP will confirm the documentation required.

This agreement is on the basis that you, the intermediary, are satisfied that the income declared is accurate and that you retain evidence of income on file from the date of completion.  Our detailed income evidence requirements are set out on our website.  We reserve the right to request this evidence and random checks are in place with intermediaries to request this proof of income.

We undertake regular monthly checks with a sample of intermediaries to request this proof of income.  Failure to supply the evidence will result in the use of Fast Track being restricted.

If a case is re-submitted the AIP may result in different evidence requirements.

First time buyers, right to buy, shared ownership and low cost housing case types are not eligible for fast track.


Conditions

• Affordability is proven within the Affordability Calculator and subject to credit score
• Employed, self-employed for two years or Retired
• Maximum LTV is 75% 
• If an existing homeowner, the applicant must have a satisfactory payment history (no arrears in the previous 12 months)
• Maximum loan size is £500,000 
• High risk applications will require evidence of income and we reserve the right to confirm income on any application made

An applicant who has never owned a residential property, whether in the UK or abroad. On joint applications all applicants must meet the definition

We allow applications from foreign nationals where the property is for their own use and for immediate occupation.

European Economic Area (EEA) Nationals and Swiss Nationals

The above citizens are treated as UK nationals.

The following countries are members of the European Economic Area (EEA).

² Nationals of A8 member states and Bulgaria and Romanian Nationals are subject to additional regulations for employment in the UK .  We will not ordinarily require evidence of this.

Other Foreign Nationals

Standard lending policy will apply where the application is a system accept without the need for further documentation.

Applicants with limited right to remain in the UK, with a low credit score and an LTV in excess of 75%, are not acceptable where dependent on that applicant's income.

All other applications with a foreign national applicant (e.g. applicants with indefinite rights to remain in the UK) may be considered subject to full underwriting and supported by the following:

• Indefinite leave or for those with limited leave a minimum of 2 years right to remain in the UK, with no restrictions on employment, proven by:
  • A Visa stamp in a currently valid passport or
  • A United Kingdom Residence Permit or
  • Written confirmation from the Border and Immigration Agency/Home Office
• If limited bureau data is available, three months bank statements
• The applicant must have been resident and working in the UK for a minimum of 12 months

We do not accept guarantor applications.

A Confirmation of Verification of Identity Certificate must be completed and meet the requirements set out within the Joint Money Laundering Steering Group Guidance for UK Financial Sector.

We reserve the right to ask for additional customer information, including identity evidence, where it is deemed necessary.

75 years at the end of the mortgage term. If lending into retirement, see the requirements for Mortgages into retirement

We will not accept any case where the applicant's stated age of intended retirement is over 75 years.

We require evidence of both current and retirement income where:

• Applicant is within five years of the intended age of retirement, or
• An applicant is 65 or more, they are not yet retired and the LTV is greater than 60%.

In addition, we will not consider cases in this category where our automated check shows that affordability is not proven based on current income.

The evidence must be supplied even where the case would have been eligible for Fast Track.

It is possible to ‘port’ most existing products to a new mortgage providing it is for house purchase/home ownership but not to a property being re-mortgaged or owned mortgage-free.  An applicants entitlement to port their mortgage product is always subject to the conditions for transferring the loan to a new mortgage in their Mortgage Terms and Conditions; in particular, any new mortgage application made will be subject to a full credit assessment and the applicant/property must meet our lending criteria at the time of the new application.  If we do not agree a new mortgage the applicant will not be able to port their mortgage product and they may then be required to pay an Early Repayment Charge if they subsequently redeem their existing mortgage.

Where redemption of the existing mortgage and purchase of the new property is not simultaneous, providing the purchase of the new property completes within three months of the redemption date, the existing product can be ported to the new mortgage and any early repayment charge will be refunded, as long as the customer takes the previous product for the full amount to their new mortgage.

On redemption of the existing mortgage the early repayment charge is paid in full and a refund will be made on completion of the new purchase, as long as the product is ported. If the new mortgage is less than the existing mortgage, the early repayment charge refund will be a proportionate amount.

Any additional borrowing must come from the new business mortgage product range.

See also ERC waivers for existing customers moving home section.

If 20% or more shareholding in a company, treat applicant as self-employed.

For family business employment, we require three months’ bank statement showing the salary and an Accountant’s letter.

We will not accept applications from customers who have been self-employed or owned their business for less than 2 years. 

Applicants who cannot be traced on the voter's roll for the years they have lived at a property, may be considered subject to a letter from the local authority confirming they had registered for those years. For applicants who did not register at the address a written explanation should be obtained and submitted for consideration

If an existing customer moving home does not want to port their existing deal they have the following options if they are still within their product period

1. Pay their ERC in full and select a new business product
2. If the customer has less than 6 months remaining until product expiry at the time of application for a new mortgage, 100% of the ERC will bee waived as long as they borrow at least the same amount.  If the new mortgage amount is less than 100% of their current balance they are eligible for a proportionate ERC waiver.  See an example below of an indicative proportionate ERC waiver:

Current mortgage     £100,000
New mortgage         £90,000
ERC waived             90%

You will need to inform the customer that they must tell their solicitor to deduct the full or partial amount of ERC waiver from the redemption monies if redemption and completion are simultaneous.  If completion is non-simultaneous, the customer must pay the full ERC due on redemption.  As long as completion of the new mortgage is within 3 months of redemption, the customer can then request a refund of the full or partial ERC.

See also 'portability' section.

The mortgage must remain with us until the product charge end date or an ERC will apply. In addition, if a benefit package is taken with the product, there is a benefit end date which may differ from the product charge end date.  If the benefit end date is before the product charge end date, the mortgage must remain at the appropriate Fixed/Tracker rate until the product charge end date.

Should your customer redeem their mortgage before the end date on the benefit package, they will need to repay the benefit (£250 cash back or a maximum of £400 for homebuyer plus or £200 for remortgage legal work).  The benefit end date is shown on the KFI and on the Rate Bulletin.  The repayment of the benefit will be in addition to any product early repayment charge which may apply.

The customer will not pay an ERC if on or before the charge end date, they:

• Simultaneously with redemption take a mortgage on a new property that completes with us for the same amount and product terms as the previous mortgage
• Simultaneously with redemption, where their existing deal has less than 6 months to expiry, elect to take a new product with us for at least the same amount.  Please refer to the 'ERC waivers for existing customers moving home' section for more information.

All customers are able to make capital repayments of up to 10% of their total outstanding loan balance each calendar year without incurring a charge. The minimum capital repayment is £500.

For Variable Rate Tracker and Fixed Rate mortgages, the ERC is expressed as a percentage of the customer’s outstanding mortgage balance at the time of redemption. The level of charge differs by product type and term. The ERC percentage remains the same until the charge end date. Product ERCs do not apply to the Flexible Offset mortgage.

A Higher Lending Charge is required to cover the excess loan over and above 75% LTV. We calculate the fee as below and this can be added to the loan or paid at completion.

There is a Mortgage Account Fee of £225, which is payable on completion of the mortgage. The fee can be deferred until the end of the mortgage.

A product change fee of £199 is payable by the customer if they want to change to another product after their mortgage application has been transmitted and prior to the product expiry/completion deadline.

You need to fax the written request to change the product to your local Regional Office, who will then contact you by telephone to obtain the customer's valid debit/credit card details.

If the customer has already paid a booking fee upfront for the original product and wants to change to another product, the new product booking fee would be payable as well.

If your client changes their mind after we have collected the booking fee, we would not refund it unless one of the following applies:

• we decline the application for any reason prior to the valuation being requested,
• after the valuation has been completed our surveyor decides that the property would be inadequate security for us,
• our surveyor down-values the property and your client needs to select a different product.

All our valuation fees are non-refundable. However:

• If we have not instructed the valuation, we would refund the valuation fee in full
• If we have instructed the valuation, but it has not been undertaken, we would refund the valuation fee, less the non-refundable survey set up fee.

The free Valuation/Valuation Bonus is not applicable in Scotland.

All Cashbacks together with advance monies will be telegraphically transferred to the legal adviser at the time of completion. A fee of £35.00 will be deducted from the loan on completion. No monies need to be collected from the customer.

We offer remortgage and homebuyer benefit packages on selected products. A benefit ERC will be payable if the mortgage is redeemed early.

Home buyer solutions (for First Time Buyers and Movers only)

• Free Valuation
  
  All customers will receive a free valuation for mortgage purposes (up to a property value of £2.5 million) - provided by our Group Survey Office.  If a customer requires a Homeview survey, they will have to arrange and pay for this separately.  We will not refund the Valuation for Mortgage Purposes fee.
• Either - £250 cashback
  
  All customers will receive £250 cashback at competion, as a contribution towards legal costs. All customers will receive £250 cashback at competion, as a contribution towards legal costs.
• Or - Homebuyer Plus
  
  We also arrange and pay for the cost of legal work involved in the purchase of your customer's new property.  However, your customer will be required to pay for any disbursements like searches, land registry fees, the fees for submitting the Stand Duty Land Tax form and the Stamp Duty Land Tax, if applicable.
  
  If any additional work is required, which is not normally associated with a standard purchase, then this will be at your customer's own cost.  Your customer will be advised of the cost of additional work before any work is carried out.
  
  If your customer wants to use our conveyancer for the sale of their own property this can be arranged at an additional cost.  Your customer will have to pay these costs direct to our conveyancer.

Remortgage solution (for remortgage customers only)

• We will provide a free valuation for mortgage purposes (up to a maximum property value of £2.5 million). We will arrange and pay for the legal work involved in transferring the mortgage. Alternatively, if a solicitor of the clustomer’s choice is used we will provide £250 as a contribution towards the legal costs incurred.

All cashbacks are telegraphically transferred on completion.

We do not offer CAT mortgages.

Interest is calculated daily and charged monthly.

Payment by Direct Debit mandate is compulsory for all products. Payments can be taken on any day of the month between 1st and 28th.

• Maximum Credit Limit (including available funds) is 75% LTV
• No second charges allowed on the property
• Not available for guarantor mortgages, business customers, right to buy cases within the first five years, homebuyer scheme, shared ownership properties, shared equity, buy to let, DWP mortgage benefit customers
• Not available in the Isle of Man
• The loan is not used for business purposes
• The Flexible Offset mortgage cannot be used in conjunction with any other product
• The Flexible Offset mortgage does not have a product ERC, however a benefit ERC may apply

• All offers are subject to availability and may be withdrawn at any time
• All applicants must meet our normal lending policy
• We reserve the right to withdraw the mortgage rate and reclaim the benefit if the property is no longer owner occupied or the customer does not comply with the conditions of their mortgage
• If the property has been owned by the vendor for less than six months, the application may be referred for investigation.  This could result in delays to completion or in some instances the application being declined.

We allow interest only applications provided there is an acceptable source of funds to repay the capital at the end of the mortgage:

• The maximum term for interest only applications without a funded investment vehicle is 25 years
• The maximum LTV for interest only with or without a funded investment vehicle is 75%
• If any part of the loan is taken on an interest only basis, the maximum LTV for the overall loan is 90%

For interest only applications with or without a funded investment vehicle, we will assess affordability on a capital and interest repayment basis and assume a repayment period of 25 years minimum. If the actual mortgage term selected is longer than 25 years for interest only with a funded investment vehicle, the longer term will be used.

Acceptable vehicles are ISA, Endowment, Pension and Investment Linked

• 95% LTV – up to £550,000
• 85% LTV – up to £1,000,000
• 75% LTV – more than £1,000,000

The maximum loan to value is also affected by the type and purpose of loan, and the property type.

The maximum term is 35 years.

For pure interest only mortgages the maximum term is 25 years.

£6,000 or
£25,000 for Flexible Offset or
product specific

Five years (subject to product term).

The maximum loan size on mortgage products relates to the total borrowing required by the customer, not just the borrowing on that product.

Repayment methods available are ISA, Repayment (Capital and Interest), Endowment, Pension, Investment Linked and Pure Interest Only.

Prior to completion, the maximum top up available is 10% of the original loan/amount, the minimum is £1,000.

The maximum LTV varies by the type and purpose of the loan and by the property type..

We do not lend on the following types of property/loan

• Agricultural restrictions
• Bridging loans
• Buying a property for investment
• Commonhold tenure
• Farms where  the farm and accommodation are together
• Freehold flats/maisonettes
• Guarantor Mortgages
• Mobile homes/River boats
• Purchase of land
• Shared Equity
• Sheltered housing and properties with restricted age for the occupants

If you customer has Buy to Let properties remaining mortgaged with Santander or Alliance & Leicester, the maximum LTV is:
  Houses - 75%
  Flats - 65%
We also require the Rental Income - Additional Information Form as evidence

Estimates are required for any Home Improvements so that the surveyor can provide an after works value.

Minimum term at the start of the mortgage is 55 years. There must be at least 30 years remaining on the lease at the expiry of the mortgage term.

The maximum LTV on the let property if remaining mortgaged with Santander or Alliance & Leicester is:

• Houses - 75%
• Flats - 65%

We also require the following evidence:

• Rental Income - Additional Information Form
• Proof of Savings (above any deposit) to cover a minimum of six months rent
• Proof of deposit 

Definition of new build

This relates to all new build/converted properties including affordable housing such as shared ownership.  We define new build as:

• Property built/converted within the last 12 months (i.e. based on the date of the completion certificate).
• Property has not been previously occupied (for converted properties - that is since the conversion has been undertaken)
• Property is being sold/marketed by a builder or developer
• Where the property is within a development that was once used for commercial or other use, i.e. not previously used for residential purposes.

Builders may offer sales incentives to prospective buyers to encourage them to purchase their properties. An incentive is anything the builder gives or provides to the buyer in cash or goods. 

We will accept up to 5% cash back towards the purchase price (no financial limit) and builder’s payment of legal fees and stamp duty only. Any reasonable non-cash incentives, eg white goods, carpets, curtains etc. will be ignored.

Standard new build LTV limits (all borrowers including First Time Buyers)

    House  80%
    Flat  70%  

Higher new build LTV limits (First Time Buyers only up to 4 x income)

    House  90%
    Flat  80%

Please see our "First Time Buyer" section for a definition of a First Time Buyer.

Please be aware that all applications will be subject to additional policy including maximum income multiples.

Customer must live in the property and Right to Buy/Acquire papers are required.

We do not offer self build mortgages

We do not accept shared equity applications.

Where the customer owns less then 100% of the property, with the remaining share being owned by a third party, our LTV restrictions apply to the value of the share owned by the customer. The shared ownership agreement must allow staircasing to 100% ownership.

We do not currently offer Buy to Let products through the intermediary channel. Please note that remortgage applications where the property is currently tenanted and/or is not currently occupied by the applicant will be declined, regardless of any future intentions.

For properties over £2.5 million, please contact us.

External Inspection Valuation

An External Inspection Valuation (EIV) or Automated Valuation (AVM) is applicable to certain products. They are for the sole use of us and no fee is charged. No reports will be provided to the customer or the conveyancer.

We reserve the right to upgrade the EIV to a full inspection, in which case the surveyor will contact the customer direct. No fee is charged in these circumstances.

Re-inspection fee

There is a re-inspection fee of £55 if one of our surveyors has to make an additional visit to a property before we release any money we’ve retained.

³ Where the purchase price is a concessionary or reduced figure, for example, when purchasing a council home, the fee will be based on the valuation rather than the purchase price.

⁴ This includes a non-refundable survey set up fee of £90.

⁵ This includes a non-refundable survey set up fee of £100.