From 4 April we are changing the way applications for a property with a Resale Price Covenant (RPC) are to be keyed.

We accept applications where the customer is purchasing a property at a discounted purchase price under an RPC, sometimes called Discount Market Scheme (DMS), and are introducing a dedicated ‘Resale Price Covenant’ scheme which should now be selected on the Scheme screen in Halifax Intermediaries Online.

If a customer is buying a property using the Government’s First Homes scheme then the ‘First Homes’ scheme and not the RPC scheme must be selected. ‘First Homes’ should not be selected for any other RPC schemes. There are no changes to the First Homes scheme.

When the RPC scheme is selected an additional question will ask for the ‘% discount against the market value?’ e.g. if a property with a full market value of £250,000 was being purchased at a discounted purchase price of £175,000 this is a 30% discount and 30 would be keyed. On the subsequent Loan screen the discounted purchase price and not full market value is keyed under ‘Purchase price (amount customer(s) is paying after % discount applied)’. The new scheme should also be selected for remortgages of a property subject to an RPC.

For product selection a product from the ‘Affordable Housing’ range should be chosen. The percentage loan to value (LTV) used for product selection is the loan amount against the discounted purchase price.

Mortgage criteria:

 

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Minimum 10% personal deposit based on discounted purchase price
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Product selected from the Affordable Housing (SE/SO/RPC) range
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Mortgage must be on a capital and interest repayment basis, no interest only
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Normal maximum LTVs will apply for the purchase of New Build properties (based on loan amount against the discounted purchase price).

 

Example:

 

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Full market valuation = £250,000
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Discounted purchase price (if 30% discount) = £175,000
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Customer deposit required = £17,500 (10% of £175,000)
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Maximum Loan = £157,500
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LTV for product selection = 90% (£157,500 loan against £175,000 discounted purchase price).

 

By selecting the RPC scheme our surveyors e.surv will automatically be advised that the property is on this scheme. A Special Condition will automatically be applied to the mortgage offer stating an RPC will apply to the property and Affordable Housing Scheme Guidance Notes will be issued automatically to the conveyancer with the offer.

New applications can be keyed on the RPC scheme from Monday 4 April. Any applications on an RPC keyed before this date would follow current rules/guidance.

Our website Products and Criteria pages will be updated with details of the new scheme.

 

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