Please note: Leeds Building Society only accepts mortgage applications from intermediaries where they are providing an advised sales service, with the exception of Buy to Let & Holiday Let applications. It is the responsibility of the intermediary to ensure that all applicable law including, without limitation, the Financial Conduct Authority rules on advised mortgage sales are complied with including, without limitation, the provision of adequate explanations.

Criteria Guide

Our criteria guide tool below allows you to search or filter to find the information you need. If you are unsure about anything or think there is something missing, please contact your BDM.

Alternatively you can download a copy of the Criteria Guide (PDF).

All our other forms and documents can be found on the forms page.

  • High Level Summary

    Tags: summary

    The Society welcomes applications from mortgage intermediaries where they are providing an advised sale process to customers. Buy to Let applications are also acceptable on an execution only basis. It is the responsibility of the mortgage intermediary to ensure that all Financial Conduct Authority rules (including MCOB) on advised mortgage sales are complied with in full. This document summarises our lending criteria.

    Mortgage applications should meet the following high level criteria as a minimum. However Intermediaries should be aware of the additional criteria / guidance in this guide.

    High Level CriteriaMinimumMaximum
    Residential mortgage loan amount £1,250,000
    Buy to Let mortgage loan amount £500,000
    Holiday Let mortgage loan amount £500,000
    Minimum Property valuation £50,000
    Mortgage term (not product) 5 years 40 years
    Age at time of application 18 years
    Age at end of mortgage term Residential 80 years
    Buy to Let 80 years
    Shared Ownership 70 years
    Distressed sale & lease back Not accepted
    Type of LendingMaximum LTV
    Residential lending up to £300,000 95%
    Residential lending £300,000 to £400,000 90%
    Residential lending £400,000 to £500,000  (Contractors: max 85%) 85%
    Residential lending £500,000 to £750,000 80%
    Residential lending £750,000 to £1,000,000 75%
    Residential lending £1,000,000 to £1,250,000 65%
    Right to Buy.
    Right to Buy documentation will need submitting and should confirm both eligibility & the discounted price. A landlord's reference or evidence of rent payments will also be required. Any request for a loan in excess of the discounted purchase price amount in subject to a ranking agreement/deed/letter of postponment being obtained from the landlord.
    75% (LTV expressed as % of property value)
    New Build (valuation using RICS new build guidance) House (excl. BTL)
    Apartments
    90%
    85%
    Buy To Let (maximum 4 properties with mortgages) 70%
    Holiday Let (maximum 3 properties with mortgages) 70%
    Capital raising for purposes other than improving mortgaged property 75%
    Capital raising for improvement of the mortgaged property, purchase of equity or purchase of additional land 90%
    Capital raising for business purposes
    Interest Only 60%
    Interest Only Part & Part (Max Interest Only element 60%, subject to savings strategy)
    Sale of mortgaged property is an acceptable repayment strategy but equity must make downsizing plausible at the end of the mortgage term.
    Buy to Let & Holiday Let lending are subject to different lending criteria. Not available for shared equity/ownership or lending into retirement.
    75%

    Maximum Loan to Value is subject to available products.

    Product fees can be added to the loan, up to the maximum LTV/loan size allowed by policy.

     

  • Acceptable Types of Security

    Tags: property

    Property must be situated in England, Wales, Northern Ireland or mainland Scotland.

    The Society operates a maximum 25% exposure to any one development. Where affordable housing is a subset of a larger development, the 25% maximum applies to the development as a whole and also to the affordable housing sub-development. If you are unsure as to whether this may impact your client’s application, we suggest contacting your Business Development Manager before proceeding.

    Minimum property valuation: £50,000 irrespective of location or lending segment.

    Property must be of good quality and readily saleable with a life expectancy well beyond the term of the mortgage.

    Older properties must be modernised to provide basic standards, including provision of an internal kitchen, shower / bath and W/C.

    Property will be the primary residence (domestic, residential owner occupation) or be used for Buy to Let / Holiday Let.

     

  • Affordability

    Tags: borrower, finance

    Whilst all parties to a mortgage will be considered, it is highly advisable to ensure the primary income generator is the first applicant.

    The Society uses affordability as a way of assessing how much we will lend. The decision to lend will be based on the borrower's ability to repay. The interest rates used for the assessment will be at a level above the proposed mortgage pay rate to reflect the impact of a rise in interest rates.

    We will lend up to 4.75 times gross income for home-movers and re-mortgages up to 85% LTV, or 4.5 times gross income for first time buyers or LTVs over 85%.

    All income for affordability must be evidenced and be in Pounds sterling.

    The Affordability Calculator can be accessed using the link below and must include all applicants and individuals residing in the property who are in a ‘relationship' (e.g. Partner, Spouse etc.):
    https://online.leedsbuildingsociety.co.uk/public/mortgages/quick_enquiry.do

     

  • Application Submission

    Tags: applications

    The Society will make every effort to speed mortgage applications through to offer and subsequently completion, but intermediaries can help expedite the process by providing all necessary documentation with the application. The relevant check lists can be accessed using the following link: http://www.leedsbuildingsociety.co.uk/intermediaries/submission-requirements

     

  • Assessment of Rental Income

    Tags: buy to let, income

    Rental income will be independently verified by the Society’s valuers and must be at least 140% of the interest payable on a stress rate of; 5.5% for purchases, capital-raising remortgages and Let to Buy remortgages; and on a stress rate of 5.0% for like for like remortgages excluding Let to Buy.

    The Society will consider rental income generated from tenants in receipt of benefits.

    Background Buy to Lets with other lenders should generate rental cover equivalent to 140% of the interest payable on a rate of 5.5%. This can be evidenced through the completion of the Existing Property Declaration Form.

     

  • Background Buy to Let Properties

    Tags: income, finance, buy to let

    Should generate rental cover equivalent to 140% of the interest payable on a stress rate of 5.5%. This can be evidenced through the completion of the Existing Property Declaration Form.

     

  • Bankruptcy / Individual Voluntary Arrangement (IVA)

    Tags: borrower, finance

    The Society does not accept applications for individuals who are subject to:

    • A Bankruptcy Order unless discharged more than 6 years ago.
    • An Individual Voluntary Arrangement, unless discharged more than 6 years ago.
    • Previous property repossessions, unless greater than 6 years ago.

     

  • Builder / Vendor Gifted Deposits

    Tags: deposit, finance

    All incentives should be disclosed to the valuer as part of the application. The valuer will consider the total property valuation recognising incentives; standard RICS process.

    It is acceptable for a builder/vendor to provide cashback or contribution towards the deposit, provided that (i) the incentive is disclosed appropriately and (ii) the value does not exceed 5% of the purchase price or valuation, whichever is the lower. If the cashback/deposit is greater than 5%, the excess will be deducted from the price and our lending will be based on the reduced value.

    Irrespective of builder/vendor cashback/gifted deposit, the Society expects a personal contribution from the buyer of at least 5% of the gross purchase price or valuation, whichever is the lower.

     

  • Buy to Let Lending Criteria Summary

    Tags: summary, buy to let

    Summary of Buy to Let Lending Criteria

    • The primary applicant must already be a residential homeowner occupier
    • Maximum loan to value on any one property: 70% purchase or remortgage
    • Rental income must be at least 140% of the interest payable on a stress rate of 5.5% for purchases and capital raising remortgages, and on stress rate of 5.0% for a like for like remortgage
    • No minimum income requirement*
    • Maximum number of rental properties (irrespective of lender): 8
    • Maximum number of properties with The Society: 4
    • Minimum property valuation is £50,000 irrespective of location
    • Maximum individual loan: £500,000
    • Property must be let on a Assured Shorthold Tenancy agreement
    • The underwriter will consider overall indebtedness vs. income
    • Studio apartments will not be considered for Buy to Let purposes
    • Interest Only available with maximum age at end of term of 80yrs.

    *The primary applicant must be able to demonstrate a primary income (earned or savings generated). Evidenced through latest monthly bank statement and latest monthly proof of income (latest year self-employed).

    Income must be in Pounds sterling. Whilst the properties are expected to be self-financing, the presence of an additional income provides contingency in the event of ‘void’ periods.

    Where a property is purchased for occupation by a family member, the 'second home' criteria applies and the advance will be assessed on the applicant's income / affordability.

     

  • Commitment Due to Expire within 12 Months

    Tags: income, finance

    Where a financial commitment is due to expire within the next 12 months, it can usually be excluded from the affordability calculation, unless it represents more than 10% of the applicants annual gross salary (ie income before tax / national insurance).

     

  • Contaminated Land (including Japanese Knotweed)

    Tags: property

    The Environment Act 1990 was intended to identify contaminated land, bring it back in to beneficial use and ensure the cost of remediation is met by an appropriate party, ideally the original polluter. If requested by the Society or its valuer, an environmental search may need to be obtained. The Society will review the recommendations made by the environmental specialist, alongside relevant legal & insurance advice.

    The Society will not lend where Japanese Knotweed is present and the valuer considers it to present a significant risk to the property &/or future saleability.

     

  • Contractors

    Tags: employment

    Applications for clients defined as ‘Contractors’, as defined below, only accepted from accredited firms. To become accredited, please contact your Development Manager.

    Applicants currently employed on a fixed term contract will be considered where they have a continual 12 months contracting history in the same discipline (eg Information Technology).

    The applicant’s gross annual income must exceed £50,000. This should be calculated by using the average gross day rate received over the last 12 months and multiplying this by the number of days contracted in the last 12 months, up to a maximum of 46 weeks (230 working days).

    The applicant must evidence that they have the ability and/or skills to re-contract within their discipline. Specifically, the period between contract(s) must not exceed 6 weeks in each instance. The Society will require evidence of the last 12 months contracts, which should show that the applicant has been able to re-contract, and the applicant’s Curriculum Vitae, along with the last 3 months business bank statements. These items should be provided in line with requirements on the Minimum Submissions form – Contractor section.

    Upon submission of the decision in principle the Society must be made aware of the applicant’s contracting status and all income provided in line with the calculations outlined in this guidance.

    When submitting applications under this criteria, applicant/s employment status should be defined as ‘Self-Employed’ and highlighted as ‘Contractor’ in the additional notes section.

    Applications will be considered up to a maximum of 85%, subject to Society criteria. Care should be taken to consider the ‘Contractor’ guidance alongside other criteria (eg property, affordability etc).

    For more information on professional contractor mortgages please see our mortgages for professional contractors pdf.

  • Convictions

    Tags: borrower

    The Society will not consider applications where a conviction exists, unless it has been spent under the Rehabilitation of Offenders Act 1974.

    Similarly, the Society will not consider applicants with pending prosecutions which:

    • Relate to any aspect of dishonesty (eg theft, robbery, fraud, arson)
    • May impact future employment or the likely conduct of the mortgage.

     

  • County Court Judgements and Defaults

    Tags: borrower

    Maximum of one County Court Judgement (CCJ) or default in the last four years, which must have been satisfied within 3 months of issue and no greater than £500 in value.

    Unsatisfied County Court Judgements and defaults are not acceptable.

     

  • Credit Card Agreements

    Tags: income, finance

    Where the total of all outstanding credit card balances exceeds £1,000, a minimum monthly payment should be used. This is calculated as 3% of the outstanding balance, per month.

     

  • Credit Score / Credit Search

    Tags: borrower, finance

    A credit search will be carried out by the Society, using an approved Credit Reference Agency. Underwriters have the discretion to request additional information in order to support the application.

    In assessing the application, the Society uses credit scoring and in addition would expect:

    • A maximum of 1 missed mortgage payments in the last 12 months.
    • No more than 2 months arrears on any credit agreement in the last 24 months.
    • No arrangement on any arrangement within the last two years.
    • No previous property taken into possession within the last 6 years.

     

  • Directors of Limited Companies (including Limited Partnerships / LLPs)

    Tags: employment

    Where a Director owns less than 25% of the shares in a limited company, the individual will be assessed as employed with affordability based on payslips (salary), dividends, etc. In this instance, the customer is not required to provide financial accounts.

    However, where the shareholding is 25% or more, the individual will be assessed as Self Employed and whilst affordability will be based on the Director's salary and dividends received full financial accounts are required for underwriting (see Self Employed).

     

  • Mortgage Exit Fee

    Tags: fees, finance

    A standard fee levied where an advance is redeemed before it reaches maturity.

     

  • Early Repayment & Fees

    Tags: fees, finance

    Fees: The Society offers a variety of mortgage products, some of which charge fees. The Product Fee and Funds Transfer Fee can be paid up front or added to the mortgage advance, up to the maximum LTV/loan size allowed by policy, thereby increasing the total amount borrowed. Interest will accrue on the fee and the mortgage at the product rate. Any fees the customer chooses to add to the advance will be considered in the Society's affordability assessment.

    Mortgage Exit Fee: A standard fee levied where an advance is redeemed before it reaches maturity.

    Early Repayment Charge: This charge is a genuine pre-estimate of the loss to the Society if a customer redeems early. The level of charge may vary by product, but is clearly illustrated in the relevant product documentation.

     

  • Employees employment

    Tags: employment

    Applicants must be in permanent full or part-time employment and continuously employed for the last 6 months, including probationary period if appropriate.

     

  • Ex-Local Authority Property

    Tags: property

    The Society will consider ex-local authority property, which is readily saleable (eg Property is not a lone owner occupied house in a large local authority tenanted development).

    Ex-local authority flats will only be considered in England, Wales, Scotland & Northern Ireland, subject to:

    • Satisfactory construction with secure communal access
    • Proven re-sale market exists, confirmed by valuer
    • Maximum of 4 floors and no ‘balcony access arrangements'

     

  • Family Purchase

    Tags: deposit, finance

    Where the property is being purchased from a close family relative and therefore sold at a discount to the market value, the Society will consider lending up to 100% of the purchase price. The LTV for product selection will be calculated using loan amount as a percentage of open market value.

    The Society will not consider applications for simultaneous capital raising / home improvements.

     

  • Fees

    Tags: fees, finance

    The Society offers a variety of mortgage products, some of which charge fees. The product fee and funds transfer fee can be paid up front or added to the mortgage advance, up to the maximum LTV/loan size allowed by policy, thereby increasing the total amount borrowed. Interest will accrue on the fee and the mortgage at the product rate. Any fees the customer chooses to add to the advance will be considered in the Society's affordability assessment.

     

  • Feudal Tenure (Scotland)

    Tags: property

    Feudal tenure is normally acceptable; this type of tenure is common to Scotland.

     

  • Financial Commitments

    Tags: income, finance

    It is important that an applicant disclose all existing financial commitments, including but not restricted to loans, hire purchase agreements, student loans, maintenance payments, leasehold payments, maintenance lease, ground rent, service charges, mortgages, school fees, child care / nursery fees, the cost of any interest only repayment strategy and other significant out goings. The monthly payment on these commitments will be deducted in assessing affordability.

    The applicant will also be required to give details of anything that they are aware of that will, or is likely to, change their income or expenditure during the term of the mortgage.

     

  • Gifted Family Deposit

    Tags: deposit, finance

    Gifted deposits from family members as defined by the regulator (spouse, parent, grandparent, sibling, child or grandchild) will be considered for mainstream residential lending. The individual gifting the deposit must be resident in the UK and will be subject to routine bankruptcy searches. The Society requires completion of the 'Gifted Deposit Form' which can be obtained from our web site and should be submitted with the application.

     

  • Guarantors

    Tags: guarantors

    Guarantors should be of substantial means to ensure they are able to meet their commitment in full, in the event they are called upon. The guarantor will be subject to standard lending criteria (eg maximum age) and their income, less existing credit commitments, mortgages & significant outgoings, must be sufficient to support the full mortgage amount requested.

    Despite the presence of a guarantor, the applicant should be able to afford the mortgage payments without additional support, within a reasonable period (5 years). Typically this would be a trainee professional where career progression is anticipated.

    The Guarantor is not party to the mortgage, but the Deed of Guarantee is retained.

    The Applicant and Guarantor must usually have good family ties (eg parent & child).

    The Guarantor must be advised to take Independent Legal Advice.

    Finally, the proposal should be submitted for a decision in principle, prior to submitting a full application to the Society. These applications cannot currently be submitted online.

    Guarantors are not accepted for Buy to Let, Shared Ownership or Shared Equity.

     

  • Help 2 Buy

    Tags: income, finance

    Where the property is purchased under the English or Welsh scheme, expenditure should include an estimation of future payments on the equity loan. This should be calculated as 4% of the equity loan per annum. This does not apply in Scotland.

     

  • Holiday Let

    Tags: buy to let, holiday let

    The Society will consider ‘holiday let’ lending requests. The Society uses 2 ways of assessing affordability on ‘holiday let’ applications; Rental interest coverage and Income affordability.

    Assessment of Rental Income on an Interest Cover Ratio basis: Rental income will be independently verified by the Society’s valuers and must be at least 140% of the interest payable on a rate of 5.5% for purchases and capital raising remortgages, and on 5.0% for like for like remortgages.

    Where assessed on an Interest Cover Ratio basis, evidence showing the latest monthly bank statement and latest monthly proof of income (yearly if self-employed) is required.

    Evidence of rental income must be supplied and independently verified by either; the Society’s valuers (standard AST or on a holiday letting basis); confirmed by an actual letting history of at least 12 months; HMRC tax confirmation (i.e. SA302 and a tax year overview); or confirmed by an accountant or set of accountants.

    Assessment on an Income affordability basis: If the property does not meet the minimum rental coverage (ICR basis), the Society will consider the individual’s ability to support the mortgage from surplus income and/or assess the case as a ‘2nd home.’

    For these applications, the last 3 months bank statements and last 3 months of proof of income (last 3 years if self-employed) evidence is required.

    Summary of Holiday Let lending Criteria

    • Maximum portfolio of 3 properties, irrespective of lender.
    • Minimum income requirement: £40,000
    • Property investment / holiday letting must not be the primary source of income.
    • Maximum loan to value on any one property: 70% purchase or remortgage.
    • Maximum individual loan: £500,000
    • Rental income must be at least 140% of the interest payable on a stress rate of 5.5% for purchases and capital raising remortgages, and on 5.0% for like for like remortgages.
    • Minimum property valuation: £50,000
    • Only single dwellings will be considered; no consent for multiple occupancy.
    • Property must be of standard construction and free of any occupancy restrictions. For this reason, holiday parks and property with local ownership clause are excluded.

    However, additional information may be required to support the application. This recognises the greater risk of void periods associated with holiday letting and may include:

    • Employment references to confirm primary business /source of income
    • Audited accounts, wage slips &/or P60

     

  • House in Multiple Occupation (HMO)

    Tags: buy to let

    Where the applicant has existing landlord experience, the Society will consider a House in Multiple Occupation, subject to:

    • Maximum of 5 bedrooms & valid HMO licence (if required)
    • Specialist valuation report used to inform rental calculation

    The Society defines a HMO in line with Government guidance as a property of at least 3 tenants, forming more than 1 household with shared toilet, bathroom and kitchen facilities.

    Confirmation must be obtained as to whether there is a need for a Mandatory HMO licence or if the Local Authority where the property is situated has additional Licensing or planning requirements. The Conveyancer must ensure these are in place by completion.

    Each of the tenants must have an individual AST agreement or Licence to Occupy for their own room and the right to use shared parts of the property, or a joint AST agreement over the whole of the property.

    This arrangement ensures tenants remain liable for their own rent only, hence it is important that the AST clearly identifies the individual's room.

     

  • Insurance

    Tags: insurance

    As a minimum, the Society requires that the property be covered by appropriate buildings insurance at all times. The amount of cover should be sufficient to demolish & rebuild.

    The Society recommends that appropriate life insurance is in place for all borrowers.

    The Society encourages mortgage applicants to protect their mortgage payments against the risks of unemployment, accident or sickness resulting in an inability to work.

     

  • Leasehold Flats / Maisonettes

    Tags: property

    Leasehold properties with an unexpired lease of at least 85 at the start of the mortgage are acceptable, subject to:

    • Floor space of at least 28 square metres (new build / purpose built).
    • Availability of a lift where the property extends beyond 4 floors.
    • Acceptable ground rent terms which are either tied to open market value of the property, or variable ground rent increases which are fixed by the lease at the outset and reviews are at intervals of 21 years or more.

    The Society will consider lending where the renegotiation of the lease is central to the underlying purchase. The new lease must meet the minimum term at completion.

    Virtual freehold (where the unexpired lease is in excess of 500 years) is acceptable.

    Flying freehold and freehold flats may be considered where a relatively small proportion of the property extends over another and the valuer states that re-saleability is unaffected.

    There are a small number of property types where the Society would not look to lend and these include:

    • Freehold flats / maisonettes are not acceptable other than as stated above
    • Ex-local authority / housing association flats / duplex apartments above 6 storeys
    • Properties where the ground rent is tied to the Retail Price Index (RPI)

     

  • Lending into Retirement

    Tags: retirement

    Lending into Retirement is defined as any loan term which extends beyond the applicants stated retirement age or 70 years, whichever is earlier. Pension age used if not stated.

    Where lending extends in to retirement the Society will require:

    Period from RetirementProof of incomeUnderwriting Approach
    Less than 10 years to retirement and/or if the loan extends greater than 5 years beyond retirement Evidence of pension income* Affordability will be based on the lower of earned or pension income
    More than 10 years from retirement and less than 5 years extends beyond retirement Evidence of pension contributions (e.g. payslips) and Lending into Retirement Declaration (refer to link below) Affordability based on earned income
    Applicant already in retirement Evidence of pension income* Affordability will be based on pension income

    *Affordability will be based on 100% of private / state pension income. Guaranteed pension credits may also be considered.

    Underwriters may request further details or evidence to support any information provided on the application

    Lending into Retirement is not available on interest only, Shared Ownership or Shared Equity.

    The Lending into Retirement Declaration can be downloaded from our web site using the following link: http://www.leedsbuildingsociety.co.uk/_resources/pdfs/intermediaries-pdfs/intermediaries-forms-pdfs/lirdec.pdf

     

  • Maternity

    Tags: borrower

    If an applicant is employed and pregnant having not yet started her maternity leave, the Society will need to know when she expects to both leave and return to work. If an applicant is employed and currently on maternity leave, the Society will need to know her expected return to work date and salary.

    In both instances a child will need to be taken into consideration towards affordability, and evidence of contingency funds to cover mortgage payments during maternity leave may be required.

  • New Properties / New Build

    Tags: property

    New Build definition – Property built in the last 2 years and awaiting first occupation. The maximum loan to value on new properties is 90% on houses and 85% on apartments.

    All incentives provided by the builder must be disclosed at application. Although not an exhaustive list, incentives can include cash back on completion, payment of legal fees, payment of stamp duty, or the provision of kitchen / entertainment equipment. The standard CML Disclosure of Incentives form can be downloaded from our website. In the absence of the CML disclosure, all incentives should be included in the section “Are there any further matters considered essential for mortgage purposes?”

    The valuation will reflect the price at which the property is readily saleable, irrespective of any incentives provided - the lower of purchase price or independent valuation.

    All properties built within the last 10 years must be covered by an approved certification / insurance scheme.

    For Architects and for all other schemes, please consult the Society’s CML / Society’s Instructions to Solicitors (Part 2).

    Architect’s certificates may be accepted, where they are signed by:

    • Qualified Architect, who is a corporate member of the Royal Institute of British Architects, or
    • Qualified Chartered Building Surveyor, who is a corporate member of the Royal Institution of Chartered Surveyors

    Evidence of appropriate valid personal indemnity insurance will be required and the certificate must be for the benefit of the borrower(s). The Architect must confirm that he has supervised the whole project.

     

  • Non-Standard Construction

    Tags: property

    The valuers guidance notes include a full list of acceptable construction types. Steel framed properties are not normally acceptable. However, these may be considered where the valuer states that re-saleability is not affected and the property is subject to a durable outer leaf (eg brick, block or stone). In addition, a Structural Engineer's report would be required in order to confirm that the structural frame is in satisfactory condition and free from corrosion where bolted to the floor slab.

    Pre-fabricated reinforced concrete properties are not normally acceptable. However, these may be considered where the valuer states that re-saleability is unaffected and the property has been repaired under a PRC Home Limited approved scheme with a 10 year guarantee (eg Leeds City Council repair scheme with certification is acceptable).

    Importantly all adjacent dwellings must have been repaired. For example, all homes in a terrace or both homes in the event of semi-detached.

     

  • Number of Applicants

    Tags: borrower

    Single and joint mortgage applicants are welcomed by the Society. Additional applicants (up to a combined total of 4 individuals) will be considered where the additional parties are close family members.

    Caution must be exercised where there are 2 or more applicants and the purpose of the loan does not appear to benefit all parties proportionally. For example, where capital is raised in joint names is primarily for the repayment of debts owed entirely by one of the parties. In such instances, the Society reserves the right to amend criteria and recommends that each applicant seek independent legal advice.

     

  • Other Financial Commitments

    Tags: income, finance

    Where the existence of other financial commitments may appear to compromise an applicant's ability to repay the proposed mortgage, the Society may request additional information.

     

  • Other Income

    Tags: income, finance

    The Society will consider other sources of income, where the combined value does not exceed 100% of household primary income. Other income is considered as illustrated in the following table:

    Type of IncomeConsidered
    Overtime/bonus/shift allowance 100% if guaranteed
    50% if regular. If annual bonus last 3 years P60's required.
    Commission 50% if regular / guaranteed
    Child benefit/Child tax credit Not acceptable
    Working Family tax credit Up to 100%
    Employment and Support Allowance – Support Group Up to 100%
    Car allowance Up to 100%
    Maintenance (supported by court order) 50% if payable for the term of the mortgage

    Finally, net rental income can be used, subject to proof of payment for a period of not less than 12 months. Proof of payment can be obtained from bank statements, qualified accountant.

     

  • Overdraft Facilities

    Tags: income, finance

    Additional information may be requested where an applicant has exceeded an agreed overdraft in the last 12 months, resulting in an unauthorised overdraft.

     

  • Primary Income

    Tags: income, finance

    The Society considers the following sources of income as ‘primary income':

    Basic Salary Mortgage Subsidy
    Large Town Allowance Self-employed income (including dividends)
    Rent Allowance Pension income

    Additional information is available on sole traders & partnerships, under the heading 'Sole Traders / Partnerships', information on contractors under the heading 'Short Term Contracts' and information on directors of limited companies under the heading 'Directors of Limited Companies (including Limited Partnerships / LLPs'.

     

  • Proof of Payment – Satisfactory Conduct

    Tags: income, finance

    Credit Bureau data is used to confirm satisfactory payment of existing credit commitments. In the unlikely event that this information is not available, confirmation must be obtained from existing and previous lenders that commitments have been met consistently for a minimum of the previous 12 months.

    The most recent mortgage statement provides acceptable proof of mortgage payment, subject to statement date within 6 months of new mortgage application.

     

  • Property Conversion

    Tags: property

    Mortgages on a property which has been converted (eg multiple apartments) will be considered, subject to solicitor confirmation that the necessary planning permissions were obtained and valuer confirmation that the conversion is of a high quality.

    Apartments may be subject to additional criteria (see Leasehold Flats / Maisonettes).

     

  • Properties Located Above Food Outlets

    Tags: property

    Properties which are above, adjacent or near to commercial premises may be acceptable subject to the following:

    The proximity of the commercial use must not affect the quiet enjoyment of the property. Consideration should be given to the location of the property. The property must be located in a desirable area with good demand, readily saleable and readily marketable.

    For example, properties which are adjacent to, or in close proximity to a Public House, Cattery, Kennels, restaurant or food outlet, petrol station, laundrette or pet shop would not be deemed as suitable security. This is not an exhaustive list.

     

  • Properties Occupied by a Family Member

    Tags: buy to let, second homes, property

    Where the property is to be occupied by a member of the applicants family (defined as a spouse, civil partner, a person whose relationship has the characteristic of a married partner, a parent, brother, sister, child, grandparent or grandchild) the application will be processed as a Regulated Mortgage Contract to comply with FCA regulation.

    Where the occupant is not a family member, the application should proceed as Buy to Let.

     

  • Release of Retention Policy

    Tags: retentions

    A 'retention' may be applied where the valuer identifies important work to be undertaken. The retention will be discharged upon completion of the necessary work or acceptance of specialist reports.

     

  • Repayment Strategies (Interest only)

    Tags: repayment, finance

    The Society will consider 'interest only' mortgages. However this option is not available on Shared Equity, Shared Ownership or where the term extends beyond stated retirement.

    Interest Only mortgages are available up to 60% LTV with additional lending on a Capital Repayment up to 75% LTV on a ‘Part & Part' repayment basis – see product availability.

    Whilst the Society may choose to accept a repayment strategy, acceptance does not guarantee that the proceeds will be sufficient to repay the debt in full. The Society will seek to satisfy itself that the repayment strategy is clear, credible and appropriate.

    Where relying on savings, investments or pension to repay the advance, the repayment strategy must have been in place for a minimum of 12 months. Borrowers should regularly assess the value of their investment(s), seeking independent financial advice where appropriate.

    Borrowers should make appropriate life insurance for the life of the mortgage to ensure the outstanding debt balance is repaid in full. Such policies are not assigned to the Society.

    Up to three repayment strategies can be used to cover the value of the Interest Only element and must be in pounds sterling. Repayment strategies include:

    Pensions: 25% of the expected pension pot based on the central (or lower) growth estimate in the latest pension statement (within last 12 months).

    Regulated Investments (Endowment Policies): The Society will consider existing regulated investments, based on the projection of the investment using the central growth scenario and evidenced by the latest statement (within last 12 months).

    Savings & Investments: Established savings / investments, where the value is at least equal to the amount advanced; evidenced by latest statement / valuation (within last 12 months).

    Where an individual intends to rely on a combination of existing savings, supplemented by future regular saving, the Society will consider whether the combination represents a plausible repayment strategy.

    Stocks & Shares: Shares should be in FTSE 100 / 250 Companies, with a minimum of 3 companies within the portfolio. Evidence of value and ownership must be provided.

    Sale of Mortgaged Property: Where sale of the mortgaged property is the intended repayment strategy, sufficient equity at the end of the mortgage term must exist to provide a plausible downsizing option. The equity can be comprised of the deposit and the amount repaid under capital and interest terms. This recognises that upon sale of the property, the customer will need to repay the loan and purchase another home.

    To ascertain the likelihood of your customer meeting our minimum equity requirements you can call our Telephone Business Development Team on 03450 505555.

    Details of the intended downsizing property type and location (postcode, town, region), should be declared using the free text fields within the AIP process.

    Sale of Other Property: The Society will accept equity in ‘other' properties as an intended repayment strategy. A plausibility check will be undertaken against the estimated level of equity.

     

  • Restrictive Covenants (Including Section 106 & Section 75 for Scotland)

    Tags: property, borrower

    It is increasingly common for properties to have clauses which restrict who may purchase a property. These clauses are typically designed to maintain the supply of local affordable housing. Restrictions typically require the buyer to already live within a defined area or meet local salary restrictions, albeit there are many other types of restrictions and specific clauses can vary by location.

    The Society will typically accept the following types of restrictions:

    • Salary restrictions (typically Affordable Housing/Discounted Housing Schemes);
    • Local living restrictions (typically Local Ownership Schemes); or
    • A combination of the above

    However, acceptance is subject to one (or more) of the following:

    • A cascade mechanism is in place that commences after a maximum of 3 months from the date of possession, with no restriction of any kind after 6 months; OR
    • A Mortgagee Exclusion Clause applies immediately upon possession and will continue in force for successors in title to the mortgagee ensuring that all successors also take free from the relevant restrictions; OR
    • The restriction only applies to the first transaction (i.e. the initial purchase transaction) and is subsequently dis-applied to any future transactions.

    Full details are provided in the Solicitors Guidance notes. Any restrictions should be disclosed in the application in order to ensure the valuer is fully informed in their assessment of the property. This information should be included under ‘other information.’

    The Society will not consider any other clauses/restrictions than those listed above.

     

  • Residency

    Tags: borrower

    Applicants should

    1. Be UK tax payers
    2. Have resided in the UK for a minimum of the last 2 years, or

    Are a UK national in service abroad with HM Forces or, who are employed abroad by a UK based or internationally known employer.

    Non-UK nationals, a valid EU passport would be provided. For non-EU Nationals the applicants permanent right to reside should be evidenced and confirmed

     

  • Second Employment

    Tags: employment

    Income from additional employment will be considered where permanent employment has been maintained for a minimum of 6 months. The details of both jobs should be disclosed including (1) income, (2) length of employment, (3) nature of employment, and (4) number of hours worked per week.

     

  • Second Property

    Tags: second homes, property

    Applications to purchase a second home will be considered up to a maximum 80% LTV and subject to the applicant's ability to support both properties.

    The application should be submitted for decision in principle, prior to formal application.

     

  • Self-Build / Custom Build

    Tags: property

    At this time the Society does not offer any schemes specifically designed to support self-build or custom build during construction. However, we will subsequently lend on finished properties as 'New Build.'

     

     

  • Self Employed (including Sole Traders & Partnerships)

    Tags: employment

    Where a business has traded for at least 3 years, the application should be supported by accounts or a fully completed Accountants Certificate for the last 3 years or the 3 years tax calculations (SA302s) and the tax year overviews. Where a business has traded for less than 3 years, a minimum of 2 years accounts are required. SA302’s and Tax Year Overview documents can be obtained from HMRC website.

    The Society will look to support self-employed individuals, where the business is prospering. However, the Society will also consider applications where profits have reduced, subject to the underwriter being satisfied about the sustainability of income from the business.

    The Society does not support applications where net profits show a continued deterioration.

    The affordability assessment will be based on the average profitability over the period for which financial accounts are provided.

    Accounts should be prepared by a qualified Accountant and, if considered necessary by the Underwriter, proof of the continuing existence of the business may be requested.

    Accounts or accountants certificate are acceptable evidence of earnings, where signed by a qualified accountant from the list below:

    • Institute of Chartered Accountants in England & Wales.
    • Institute of Chartered Accountants of Scotland.
    • Institute of Chartered Accountants in Ireland (Chartered Accountants Ireland).
    • Institute of Financial Accountants.
    • Association of Accounting Technicians.
    • Association of Authorised Public Accountants.
    • Association of Chartered Certified Accountants.
    • Association of International Accountants.
    • Association of Taxation Technicians.
    • Certified Public Accountants Association.
    • Chartered Institute of Management Accountants.
    • Chartered Institute of Public Finance & Accountancy.
    • Chartered Institute of Taxation.

    Where the accounts include exceptional items, providing additional information on these events will help expedite the application and reduce the probability of additional questions.

     

  • Shared Ownership / Shared Equity

    Tags: overview, shared ownership, summary

    The Society will not consider interest only lending for shared equity / ownership.

    Shared Ownership and Shared Equity are not interchangeable and possess different characteristics. These can be summarised as follows:

    Shared Ownership - Borrower acquires a percentage of the property and pays rent to the Landlord on the remaining interest in the property.

    Shared Equity - Borrower purchases 100% of the property but only pays a percentage of the market value with the remaining value provided by an equity sharing lender. Typically, no rent is payable.

    Shared Ownership

    The Society does not lend on Shared Ownership schemes in Scotland, however it does support the shared equity 'LIFT' scheme (formerly Homestake).

    • The tenure of Shared Ownership properties will by leasehold
    • Minimum share of the property to be purchased: 25%
    • Maximum share of the property to be purchased: 75%
    • The Society will lend up to 95% of the borrower's share, subject to product
    • Must allow staircasing up to 100% ownership
    • Arrangement must be through a registered Housing Association or Registered Social Landlord (no exceptions)
    • Any rent, maintenance or service charge must be declared
    • The completing Solicitor must confirm that the lease meets the Society requirements

    The lease must allow an adequate mortgage protection clause that protects the Society from losses in the unlikely event that the property is taken in to possession, or achieved by way of a suitable Deed of Postponement / Priority. The Mortgage Protection Clause must cover the initial loan and all additional lending / staircasing up to 100%.

    Shared Equity

    In both scenarios the Landlord or equity sharing lender benefit from any change in the value of the property; the financial benefit is proportional to their share of the property.

    • The Society will lend up to 95% of the borrower's share, subject to product
    • The initial equity loan must be no more than 40% of the current market value.
    • The equity loan must be on an interest free basis secured by a 2nd charge on the property (exception of Help to Buy equity).
    • No rent, fee or other payment should be payable by the borrower in respect of the equity share loan.
    • Arrangement must be through a registered Housing Association, Registered Social Landlord or through a Government or Local Authority approved and funded schemes.
    • The completing Solicitor must confirm that the scheme meets the Society's shared equity requirements.
    • This includes any requirements in regards to the equity loan as detailed in Section 1 of the Society’s CML handbook.

    The Society will lend on the Government Help to Buy:equity loan scheme, available in England, Scotland, Wales, London and In Scotland, the Society will also lend on the 'LIFT' scheme (formally Homestake).

     

     

  • Short Term Contracts

    Tags: employment

    Applicants employed on a short term contract will be considered where the contract has already been renewed at least once with the same employer. Alternatively, where there is an established record of employment covering a minimum of 12 months within the same field of business.

     

     

  • Sole Traders / Partnerships

    Tags: employment

    Affordability assessment will be based on net profit or the individual's share of total profits. Full financial accounts are required for underwriting (see Self Employed).

     

     

  • Solicitors / Licenced Conveyancers

    Tags: solicitors

    The Society operates a panel of solicitors or licensed conveyancers. Where the solicitor/licensed conveyancer chosen to act on behalf of the applicant is on the Society's panel, the Society will also instruct them to act on its behalf. If, for any reason, the Solicitor / Conveyancer is not acceptable to the Society, then the Society will instruct its own Solicitors at a cost to the applicant.

     

     

  • Source of Deposit

    Tags: source, deposit

    Builder / Vendor Gifted Deposits: All incentives should be disclosed to the valuer as part of the application. The valuer will consider the total property valuation recognising incentives; standard RICS process.

    It is acceptable for a builder/vendor to provide cashback or contribution towards the deposit, provided that (i) the incentive is disclosed appropriately and (ii) the value does not exceed 5% of the purchase price or valuation, whichever is the lower.

    If the cashback/deposit is greater than 5%, the excess will be deducted from the price and our lending will be based on the reduced value.

    Irrespective of builder/vendor cashback/gifted deposit, the Society expects a personal contribution from the buyer of at least 5% of the gross purchase price or valuation, whichever is the lower.

    Family Purchase: Where the property is being purchased from a close family relative and therefore sold at a discount to the market value, the Society will consider lending up to 100% of the purchase price. The LTV for product selection will be calculated using loan amount as a percentage of open market value.

    The Society will not consider applications for simultaneous capital raising / home improvements.

    Gifted Family Deposit: Gifted deposits from family members as defined by the regulator (spouse, parent, grandparent, sibling, child or grandchild) will be considered.  The individual gifting the deposit must be resident in the UK and will be subject to routine bankruptcy searches. The Society requires completion of the ‘Gifted Deposit Form’ which can be obtained from our web site and should be submitted with the application.

  • Standard Construction

    Tags: property

    A property of standard construction will typically meet the following criteria and are appropriate for mortgage lending

    Walls – Solid (min 230mm) or cavity (min 280mm), built in brick, natural stone, reconstituted stone, concrete block, cob or flint.

    Pitched Roof – Typically timber, but if the property is of acceptable construction, then steel frame covered in slate, thatch, tile or copper are usually accepted. Modern lightweight ‘mock slate’ is general accepted also.

    Flat Roof – Accepted where covered in asphalt, felt, copper, lead or zinc.

     

     

  • Studio Flats

    Tags: property

    Studio flats are acceptable for residential applications, subject to the following:

    • Internal floor areas of a minimum of 30sqm
    • Self-contained with a separate bathroom required
    • No basement studio flats
    • Natural light required

    For the avoidance of doubt, studio flats are not acceptable for Buy to Let purposes

     

     

  • Unusual Construction

    Tags: property

    Properties of unusual construction may be considered by the Society, subject to a review by the Society's preferred valuers and confirmation that the property provides adequate security.

     

     

  • Valuation

    Tags: valuation, property

    The minimum acceptable property valuation is £50,000.

    The Society offers a choice of valuation types:

    Mortgage Valuation Report – The valuation is prepared for the Society (not for the borrower). It is required as a minimum and is carried out by a valuer on the Society's panel. It only answers the Society's questions concerning whether the property is suitable security for lending purposes. It does not imply the price is reasonable or if the property has any defects.

    Homebuyer report - Designed as an economy service. It differs from a Building Survey in two major respects (1) It is intended only for particular types of home i.e. houses, flats and bungalows, which are of a conventional type of construction and in apparently reasonable condition, (2) It focuses on essential defects and problems which are urgent or significant and have an effect on the value of the property.

    A Homebuyer Report can be arranged for you by the Society. However, if you decide to instruct your own valuer who is not on the Society's panel, you will still have to pay for the Society's Mortgage Valuation Report.

    Building Survey & Valuation - A Building Survey is suitable for all residential properties and provides a full picture of their construction and condition as far as can be assessed by visual inspection. The scope of the inspection can be tailored to suit your own individual requirements and the surveyor can be asked to comment on individual aspects that may be of concern to you.

    Due to the detail and individual nature of a Building Survey, the Society would be more than happy to provide you with details of your local office of Society approved chartered surveyors. They will discuss your requirements and carry out the survey together with the Leeds Building Society valuation report. If you choose to instruct your own surveyor you will still have to pay for a mortgage valuation report from the Society's approved valuer.

     

     

  • Who can be excluded

    Tags: borrower, finance

    All occupants not in a ‘relationship' with the applicants (e.g. child, lodger etc.) and fit the below criteria can be excluded from the affordability calculation:

    • Contributes to the household, through rent payments.
    • Has independent income.

    The following must be provided to exclude ‘non relationship' occupants from the affordability calculation:

    • A payslip no older than 3 months, showing the occupier to be financially independent and contributes to the household, through rent payments.
    • A completed ‘Declaration of Occupier' form

    The Declaration of Occupier form can be accessed using the link below:
    Declaration of Occupier form