We are making some changes to our criteria which go live as of Monday 17th August 2020.
Hanley Economic has made a conscious effort to streamline and simplify some of our criteria, so whilst they may not be massive news worthy updates, hopefully our broker community and you as our business partners will find this a little easier to work with. I’ve outlined actual changes to our criteria below.
I am on annual leave after today, returning on 10th August. As you might know, I action criteria and products updates on my own so any support you could give in updating your systems or sending me any relevant grids to update upon my return would be really appreciated. One person controlling all this info can get a little bit crazy! This information will not go live before then, so any applications that come in under our current criteria will be accepted until this is launched on 17th Aug.
If you have any queries, please send over and I will action upon my return.
Changes are listed below;
| Applicant | Item | Updated Criteria | Notes |
| Number of applicants | Maximum applicants: 2 | Applies across ALL mortgage types.
It was previously up to 4 applicants. | |
| Debt Relief Orders | Prime Applicants who have had a previous debt relief order must have redeemed it in full more than 24 months ago.
Near Prime / Adverse Applicants must not have entered into a Debt Relief Order within the last 12 months. Where a Debt Relief Order exists no missed payments within the last 12 months. | Previously we didn’t have this included in our criteria. | |
| IVA’s | Applications will be considered from discharged IVAs subject to the applicant being discharged for a minimum of 3 years. | Applies across ALL mortgage types.
Previously only acceptable if discharged for 6 years. | |
| Bankruptcy | Near Prime / Adverse Applications will be considered from discharged bankrupts subject to the applicant being discharged for a minimum of 6 years. | Previously we did not accept bankruptcy for Near Prime applicants, this is now acceptable.
We already have this criteria in place for prime applicants. |
| Employment & Income | Income considered for a RIO mortgage | Please note earned income will NOT be taken into account for RIO, the mortgage is based on retirement income, income from investments and rental property only. These are evidenced via tax assessments.
| Previously we would not accept income from investments and rental income.
This only applied to RIO mortgages. |
| Pending Pay Rise | Pending pay rise due within next 3 months is acceptable subject to written confirmation from the employer that this has taken place prior to completion.
| Applies across ALL mortgage types.
We have accepted pending pay rise before this, but hopefully this just makes it a little more clear for applicants. | |
| Fixed Term Contracts | Applicants must have been employed for a minimum of 18 months or more continuous service in the same type of employment, providing there is a minimum of 6 months of the current contract remaining.
Contracts acceptable directly from the company for which the employee is providing services and not via a third party. | Previously, applicant must have been on second contract with employer for a minimum of 12 months.
This just brings us in line with market standard. | |
| Proof of Income | The latest 3 months payslips, 12 if paid weekly, will be used to assess permissible income. Where this is not representative the P60 can be requested as evidence (e.g. in the case of annual bonus)
Online payslips are acceptable, handwritten payslips are not acceptable. An employment reference will be requested where there is any doubt. | ||
| Self-Employed trading | The applicant must have been self-employed for a minimum of 2 years.
| Previously we had 18 months with a 6 month projection, we have changed to this to simplify.
Applies across ALL mortgage types. | |
| Self-employed + Proof of Income | We will use the following for the purposes of calculating income: Average of the latest 2 years net profit which cannot be greater than the latest years figure. OR Average of the latest 2 years’ salary and dividends Declining profits are not normally acceptable and cases should be referred prior to submission. | In line with above, instead of allowing a projection for the last 6 months we will now only accept 2 years accounts.
Applies across ALL mortgage types. | |
| Maternity / Paternity Leave | Applicants on maternity/paternity leave will be considered, written confirmation from their current employer stating their return to work date and salary will be required
| Previously we had not allowed Mat or Pat leave for near prime applicants, this is now acceptable.
This is already in criteria for our other mortgage types. | |
| Second Jobs (Self-Employed) | Second jobs for self-employed applicants will now be considered.
We will now consider a second job for self-employed applicants as well as employed applicants. This must have been held concurrently for 12 months, can be proven via normal proof of income requirements, cannot exceed 50 hours and overtime will not be taken into consideration if income from second job used. | Criteria has been simplified and applied to self-employed applicants.
Applies across ALL mortgage types. | |
| Benefits
Proof of Income
Acceptable Benefits Income | Benefits may now be considered.
Income derived from benefits may be considered where it is not the sole income and where earned income is a minimum of £10,000. The amount of benefits received cannot exceed earned income.
A letter from the relevant department to confirm the level of benefit income.
A maximum of 50% of the below benefits types is permitted:- · Child Benefit · Child Tax Credit · Working Tax Credit (or equivalent stated under Universal Credit) · Disability Living Allowance (DLA) · Disability Income Support · Industrial Injuries Disablement Benefit · Personal Independence Payment (PIP) (or equivalent stated under Universal Credit) | This has previously not been considered.
Applies across ALL mortgage types. | |
| Approved Accountancy Bodies | List of acceptable accountants certificates was outdated and has been revised to reflect current market.
Accountant’s certificates should be prepared by an Associate or Fellow of an approved accountancy body: · Institute of Chartered Accountants (ICA) · Association of Chartered Certified Accountants (ACCA) · Chartered Institute of Management Accountants (CIMA) · Institute of Financial Accountants (IFA) · Association of Authorised Public Accountants (APA) · Chartered Institute of Public Finance & Accountancy (CIPFA) · Chartered Institute of Taxation (CIOT) · Association of International Accountants (AIA) · Association of Accounting Technicians (AAT) | Previously this was listed as; CPFA, AAPA, ACCA, FCCA, FCA, ACA and has now been updated.
Applies across ALL mortgage types. | |
| Gambling | This is now referred to as ‘gambling transactions’ and average of last 3 months will be used for affordability. | Gambling has previously been written in our criteria as ‘Gambling Debts’.
Applies across ALL mortgage types. | |
| Background Properties | Background properties/buy to lets are not permitted for shared ownership lending.
Applicants must have no more than 3 BTL properties (per application). The following will apply: Background BTL will be treated as self-funding where: · There is at least 3 months rental history (AST and bank statements showing rental income required) AND · The rent received is equal to or more than the stressed mortgage payment (e.g. £100,000 x 5.5% x 145%)
If an existing BTL is let on a HMO basis the rent will be evidenced via tax assessments.
The expenditure associated with a Background BTL will be included in affordability if: · There is no rental history (if this applies the stressed mortgage payment will be used for affordability, but no rental income taken into account) AND/OR · There is a shortfall between the rent received and the stressed mortgage payment. The shortfall amount will be included for affordability.
Background property (Not BTL) The mortgage at the current pay rate will be included for affordability | Applies across ALL mortgage types.
This has been simplified from previous wording and should offer some clarity. | |
| HMO Background Properties | If applicant has background property which is a HMO, this can now be accepted and rent will be evidenced by tax assessments. | This wasn’t previously stated in criteria.
Applies across ALL mortgage types. |
| Property | Scottish Islands | We now have a definitive list of Scottish Islands we will lend on;
Acceptable Scottish Islands; · The Orkneys · The Shetlands · Arran · Bute · Harris & Lewis · Islay · Mull · Skye
Lending in the Scottish Isles is not permitted for BTL and Shared Ownership. | Previously all islands were by referral, now we have a definitive list which should cut down on referrals.
Applies across ALL mortgage types.
|
| Isle of Man | We do not lend here. | This wasn’t stated in criteria previously.
Applies across ALL mortgage types. | |
| Leasehold Properties | Here we have tried to make our stance on leasehold easier to digest;
Leasehold tenure is acceptable provided Ground rent, Service Charges and the review process is reasonable as confirmed by the valuer. Examples of unacceptable terms are: · Where ground rent escalation is linked to the value of the property or an index greater than the Retail Price Index (RPR) · The current ground rent is 0.5% or higher of the property value · The rent review period is 5 years or less · The ground rent doubles in less than 20 years · Ground rent is £250 (£1000 in Greater London) · There are disproportionate Service Charges · The above list is not exhaustive and we will be guided by the valuer and Solicitor when determining whether a leasehold property is acceptable. | Applies across ALL mortgage types. | |
| Grade II* | We will not accept both Grade II and Grade II* listed properties. | Grade II* is simply an addition.
Applies across ALL mortgage types. | |
| Converted flats | We have added some commercial to residential.
Converted Flats up to 10 floors Subject to conversion being undertaken with full planning and building regulation consent and that there are no onerous conditions contained within the lease and that the building is being professionally managed. Commercial to Residential are not acceptable other than hospitals, schools, churches, pubs, doctors surgeries, police stations. | Applies across ALL mortgage types. | |
| Max Number of Bedrooms | Max number of bedrooms: 6 | Previously 5.
Applies across ALL mortgage types. | |
| Minimum Property Value | We have simplified the minimum property value;
A minimum property value of £50,000 is applicable to all lending types.
In addition residential and shared ownership lending inside the M25 is restricted to a minimum of £125,000. | This was previously different with BTL, self-build and near prime.
Applies across ALL mortgage types. | |
| Timber Frames | Timber frames are now acceptable for Residential & Buy to Let properties. | This may have already been noted in criteria you have for us, this is simply being streamlined and clearly stated in criteria as it wasn’t before. | |
| Part Exchange | Part exchange now acceptable for Residential |
| Loan Criteria | Gifted Deposits | We have clarified who can provide a gifted deposit to family members;
We accept non-repayable gifted deposits from family members only. Family member is defined as Parents, Grandparents and Legal Guardians only. | Applies across ALL mortgage types. |
| Part & Part | we now have clarified our stance on part & part;
The Society will consider both Capital and Interest and Interest Only repayment types singularly for new mortgage borrowing. | Applies across ALL mortgage types. | |
| Mortgage Offer | All mortgage offers now valid for a period of 6 months as standard. | Applies across ALL mortgage types. | |
| Renting During Build | Rent costs whilst applicant is building a self-build property will no longer be taken into account for affordability or income. | Applied to self-build mortgages. |
