Buy to let lending criteria

Lending area
Application accepted across England and Wales.
Properties located in Scotland, Northern Ireland or the Isle of Man will not be accepted.

Minimum mortgage amount
£50,000.

Minimum property valuation
£75,000 increasing to £250,000 for properties located within the M25 corridor.

Maximum mortgage amount and loan to value limit
Maximum £500,000 to 70% loan to value.

Mortgage terms
Minimum 5 years and maximum 35 years.
The term must not extend beyond the oldest borrower’s 85^th birthday.

We can lend up to your clients 85th birthday providing they are:

• Currently in receipt of at least £20,000 income
• Can evidence they will be in receipt of at least £20,000 income up to age 85

Consumer buy to let
Accepted.
You must have the required permissions of Principle to carry out consumer buy to let business.

Maximum number of applicants
Applications will be considered with up to four borrowers.

Minimum age
Minimum age of 21 years.

Maximum age
The term must not extend beyond the oldest borrower’s 85^th birthday.

Residential status
Non-EEA applicants must have indefinite leave to reside in the UK.
Applicants must have lived in the UK for at least two years.

Married applicants
Applications are considered in a single name where an applicant is in a legally sanctioned relationship (i.e. married or in a civil partnership).

Inter-family transactions
Not accepted.

Self-employed professional landlords
Accepted.

Consumer buy to let
Accepted.
You must have the required permissions of Principle to carry out consumer buy to let business.

Experienced landlords
Accepted.
Must currently hold, or have held during the previous 12 months, at least one property on a BTL basis.

First time landlords
Accepted.
Applicant’s main residential property must be the highest valued property asset.
Applications where all borrowers are first time buyers will not be considered.
A first time landlord is defined as any landlord that has not held a property on a BTL basis during the previous 12 months.

Limited companies
Not accepted.

Rental assessment
Experienced landlords and self-employed:

• Basic rate tax payers will need a minimum rental coverage of 125% at a reference rate of 5.5%.
• Higher rate tax payers will need a minimum rental coverage of 130% at a reference rate of 5.5%.

First time landlords:

• Basic rate tax payers will need a minimum rental coverage of 140% at a reference rate of 5.5%.
• Higher rate tax payers will need a minimum rental coverage of 145% at a reference rate of 5.5%.

Minimum income
£20,000.
For self-employed professional landlords, rental income can be accepted as a suitable source of income.
For all other landlord types, the minimum income requirement excludes rental income.
In the case of joint applications, at least one applicant must earn £20,000.
Proof required.

Acceptable tenancy types

Assured shorthold tenancy with a maximum 12 month tenancy agreement. 

Unacceptable tenancy types

• Holiday let;
• Sub-letting;
• Student let;
• Corporate let;
• Multiple occupancy; Local authority tenants;
• Assured tenancy;
• Regulated tenancy; and
• Persons with diplomatic immunity.

Family gifted deposit
Acceptable from an immediate family member. An immediate family member is defined as a spouse, parent, grandparent, sibling or child.

Builder’s gifted incentive
For new-build properties, we will accept a builder gifted incentive of up to 5% of the lower of purchase price or valuation to be deducted from the loan amount.
The applicant must still provide a minimum 5% deposit from their own resources.
For incentives greater than 5%, the excess will be deducted from the purchase price.

Vendor gifted deposit
Not accepted.

Remortgage period
Property must have been owned for a minimum of 6 months and must be an existing buy to let.
Property cannot be let to a family member.

Home improvements
Where the improvements exceed £20,000 or involve structural alterations, the advance will be restricted to 70% loan to value at each stage, until final completion of the works.
Stage payments will be subject to a re-inspection at the appropriate fee.
Estimates are required to support application.

Capital raising
Must be used to fund the purchase of a further property for investment purposes or a further property for own use.

Tipton & Coseley portfolios
No limit on the number of buy to let properties held with us subject to a maximum of three properties held in mortgage and a maximum overall exposure, including residential owner occupier borrowing, of the applicant(s) to the Society of £1million.

Portfolios held with other lenders
No specific limit on portfolio size subject to a maximum of three properties held in mortgage. Each application assessed individually with overall portfolio size part of this assessment.

Rental coverage
Minimum rental coverage of 140% across the existing portfolio.

Employed Applicants

Document requirements
Latest P60 and last three months payslips.

Self-Employed Applicants

Professional landlords
Minimum two years trading as a professional landlord.
Previous two years HMRC self-assessment tax return (SA302) and tax year overview.
Last three months bank statements.

Sole traders/Partners
Latest certified accounts, or latest HMRC self-assessment tax return (SA302) and tax year overview.
Income will be derived from the net profit figures.

Sub-contractors
Reference required from contractor which confirms start date, weekly earnings and that the services of the sub-contractor will continue for the foreseeable future.

Limited company directors
If the applicant’s shareholding does not exceed 25% they will be classified as being an employee of the company and the employed applicants criteria will apply.
If the applicant’s shareholding exceeds 25% they will be classified as being self-employed and the Society will require the latest certified accounts, or latest HMRC self-assessment tax return (SA302) and tax year overview.

Retired Applicants

Criteria
Retired applicants must be in receipt of personal/company pension.
State pension will be considered but only as a secondary income source.

Verification
Income will be verified via the latest pension statement or P60.

Credit search
A credit search will be carried out using an approved Credit Reference Agency.

Bankruptcy/IVA
Must be discharged/satisfied for a minimum of six years prior to application.
Trustee in Bankruptcy must confirm that there are no further claims against the applicant.
Subject to 100% subsequent record of prudent financial management.

CCJ’s
None in the last three years.
Registered and satisfied more than three years ago, will be considered, subject to a maximum three CCJ’s to a total value of £500.

Defaults
The following policy applies:

• A maximum of three defaults, to a total value of £250, registered over two years ago, and satisfied 12 months prior to application will be considered subject to a satisfactory explanation.

Specific criteria around mobile phone defaults:

• One default up to £250 registered by a mobile phone provider will be considered provided that it has been satisfied prior to application.
• Where the mobile phone provider default detailed above has not been satisfied, provided that the applicants are able to provide evidence that the matter is in dispute then the application can be considered, subject to Credit Committee approval.

Mortgage repossession
Not accepted.

Mortgage arrears
Maximum two missed payments within the last two years may be considered, subject to satisfactory explanation.

Late payments
Within last two years late payments on a credit agreement cannot exceed ‘2’ at any point. (e.g. ‘1’ or a ‘2’ on a credit agreement will be considered but a ‘3’ within the last two years will not be accepted).

Payday loans
Payday loans taken out and fully repaid more than 12 months prior to application may be considered.

Bank statements
Account must not exceed an agreed overdraft limit for more than seven consecutive days within the last three months preceding the application.
Applications where evidence that online gambling exceeds 25% of 3 month’s net salary will be declined.