General policy
General policy |
Buy-to-Let policy | Income | Property |
Special lending situations
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Lending policy for C&G mortgages
Overview
C&G mortgages are provided by Lloyds TSB Bank plc and
administered by us. We both commit to providing you with all the
information you need to enable your client to make an informed
choice about a mortgage or, if they have already made up their
mind, all the information about the mortgage they have
chosen.
C&G mortgages are also available through C&G and Lloyds
TSB branches and direct to customers over the phone and the
Internet. Different offers may be available through each of these
different outlets.
All cases are bureau scored, so a search is performed prior to
confirmation of the ability to lend.
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Age
Customers who will be 75 before the end of the
term
- The maximum age at the end of the term is 75.
- For joint customers this is based on the age of the oldest
customer/guarantor.
- Where a customer would be over 75 at the end of the term, the
term must be reduced or the application will be
declined.
- This also applies to Homeowner Loans, so where a customers
existing term exceeds their 75th birthday you cannot choose a term
to match.
This policy also applies to guarantors.
Customers over 65 at the
point of application
- Where any customer is 65 or over at the time of application the
maximum LTV is 75%.
- Homeowner Loans for debt consolidation are not acceptable for
customers over 65.
- If the customer is within five years of their planned
retirement or the default retirement age of 65 (whichever is lower)
and the term exceeds their planned retirement age, only the
retirement income will be taken into account.
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Term
A mortgage term must always be recommended based on the
individual customer’s needs.
Maximum Term
The maximum term is 35 years. However,
applications where the term is beyond 25 years will need
underwriter approval.
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Personal Deposit
The customer must have a personal stake in the
property which is not represented by a loan.
The following means of deposit are acceptable
providing they are not repayable:
- Genuine gifts from family.
- Builders' incentive (offered by a major
national/regional builder for brand new properties).
- It must not be a loan, be
repayable or protected by way of a second charge.
- Maximum LTV of 90%, customers may
utilise a 5% deposit in the form of a builders' incentive, but must
also provide a 5% personal deposit.
- Maximum LTV for new build
properties of 80%, customers may utilise a 5% deposit in the form
of a builder's incentive, but must also provide a 15% personal
deposit
- Maximum LTV for new build BTL
properties of 65%, customers may utilise a 5% deposit in the form
of a builder's incentive, but must also provide a 30% personal
deposit
- Local Authority/Housing Association Discount Purchase (Right to
Buy).
- Local Authority/Housing Association Tenancy Incentive Scheme
(not private sales).
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Use of funds
Capital raising for business purposes
If a customer is raising money for business
purposes and the turnover of the business exceeds £1 million, this
part of the loan must be non-regulated and because mixed profile
loans are not permitted, eg part non-regulated/part regulated, it
is not possible to lend for the business finance.
An application where the customer is repaying
their existing residential mortgage is acceptable. This
applies where all the following criteria are met:
- The customer must own, either individually or
jointly with another customer, 30% or more of a business at
the time of application
- The annual turnover of that business is more
than £1 million at the time of application based
on the customer's assessment, unless you have specific evidence to
the contrary. This excludes situations where the turnover will be
more than £1 million due to a capital raising transaction, and
customers own more than one business with a combined turnover of
more than £1 million.
- The money raised is to be used in a
transaction that will be reflected in the accounts of that
business, eg capital investment into the business, repayment of
business overdrafts.
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Maximum LTV
|
Application Type
|
Maximum LTV
|
|
Main advance, remortgages*
|
Interest only – 75%
Repayment – 90%
|
| Homeowner loans* |
Interest only – 75%
Repayment – 80%
|
|
Buy-to-let
|
Interest only – 75%
Repayment – 75%
|
*Interest Only / Repayment Allowances
New C&G mortgage customers
- Maximum LTV on interest only loans is 75%
- For house purchase and remortgage where the total LTV is
over 75% all borrowing must be on repayment
- A mix of interest only and repayment is allowed only where the
total borrowing is less than 75% LTV.
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Existing Customer Conversions
- Like for like conversions above 75% LTV can remain on interest
only.
- For conversions with homeowner loans if the homeowner loan
takes the total borrowing over 75% LTV then the homeowner loan must
be on repayment.
- Conversions from repayment to interest only are not allowed
above 75% LTV
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Homeowner Loans
- For all homeowner loans and remortgages with additional
borrowing the maximum LTV is 80%
- For Homeowner Loans that take the total borrowing above 75%,
the new borrowing must be on repayment
- In addition a homeowner loan cannot be taken out within 6
months of the mortgage starting or a previous homeowner loan on the
same mortgage starting.
- Neither can a term extension be requested within 6 months of
the mortgage or loan starting.
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Income used
This section should be read in conjunction
with the Income Assessment chapter. Click on this link to go to the income
assessment chapter.
When entering any ‘additional income’ only 75%
of the total amount entered is used within the affordability
calculation.
Income due to change in the
future
Some employed customers know that their income
will change within the next three months. If this is the case and
you have evidence to support it, you may enter their future income.
An example of this would be a supply teacher, who has a letter to
confirm a position they are due to start.
Examples include:
- Due to be promoted
- Salary increase within their current position, eg when
relocating (relocating allowance is not to be included)
- Currently on maternity leave, returning to work within the next
three months
- Due to start a new job
Evidence can be an employment contract,
employer's reference or a confirmation letter from the employer.
If entering onto Caseflow put today's date as the date
employment commenced.
If there will be a gap in employment of fewer
than 3 months, the customer must have adequate financial resources
to rely upon. If the gap will be more than 3 months, the
application will be referred to mortgage underwriters.
Where the customer is currently working but due to go on
maternity leave, the current income is used – click on this link to go to this topic in the Income
chapter.
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Income verification
Every customer must be able to prove their income and employment
details and we reserve the right to verify this via documents and
references.
- Employer’s contract or reference can be used to confirm the
customer’s income where they have been employed for fewer than 3
months
- References must be dated within the last 3 months
- Payslips must be dated within the last 4 months (except for
confirming annual/half yearly bonuses where payslips can be dated
within the last 12 months)
- SA302s must be dated within the last 18 months
Bank statements
- Bank statements and pension statements/references must be dated
within the last 12 months.
- They can be used to verify additional, pension or rental
income.
- Bank statements sent to the customer in the post are
acceptable, as are statements provided from the Internet.
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Repayment methods for interest only mortgages
The customer must have a plausible repayment
method in place when they take out an interest only mortgage.
Acceptable repayment vehicles are:
- Endowments
- Pensions
- ISA/PEPs
- Share portfolios/ share / unit trusts / investment
bonds
- Other lump sum investments - these could be
cash deposits in a bank or building society account, with an
insurance company or premium bonds.
Acceptable repayment strategies are:
- Sale of second property - customers who own
more than one property, may wish to rely upon the sale of the
second property to repay their mortgage on the first.
- Sale of a business - a customer who has their
own business and plans to use the proceeds of the sale of this to
repay their mortgage.
- Downsizing - customers can repay their
mortgage by selling their home and moving to a smaller, lower value
property at a later date. The downsizing must be plausible i.e. it
is plausible if the customer anticipates retaining equity. If a
customer has a one-bedroom property, it is unlikely that they could
trade down to anything smaller and the customer needs to have
somewhere else to live at the end of the mortgage term.
An unacceptable repayment strategy to C&G would be:
- Relying on inheritance, because the customer cannot be sure to
receive it.
If you have discussed a plan with the customer that you feel is
plausible and it is not on this list, contact your Business Development Manager.
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Remortgages
For all remortgages including unencumbered applications, we
insist that one of the customers has owned the property for at
least six months. There are no exceptions to this and applications
where the customers have not owned the property for this period of
time will not be accepted.
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Residence in the UK
Customers should live in the UK (apart from
the occasional business trip abroad). Consideration will be given
to ex-patriots and foreign nationals see Special Lending Situations.
Where the customer has been living abroad, any
overseas addresses must be input if using Caseflow and a
full three years' history provided up to a maximum of three
addresses.
Irrespective of nationality, UK residents
include:
- Individuals permanently resident in the UK.
- Individuals normally resident in the UK who are temporarily
overseas for less than a year.
- Members of the UK armed forces and established officials of HM
Government (and their dependants) serving abroad in military bases,
embassies etc (individuals serving in the UK armed forces who are
not British nationals must have permanent rights to reside, or be
an EU citizen).
- Temporary residents from a country outside the UK who have
stayed or who intend to stay in the UK for a year or more. The
customer must have permanent rights to reside, or be an EU
citizen.
Non-UK:
- Individuals permanently residing outside the UK (including the
Channel Islands and the Isle of Man)
- All temporary residents from the UK who have stayed or intend
to stay in a country outside the UK for a year or more (except
members of the UK armed forces and established officials of HM
Government).
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Money laundering
Each customer must be positively identified in accordance with
the Money Laundering guidelines. In order to confirm the identity
of a new customer(s) you may accept either a Current UK Full
Passport or a Current UK Photocard Driving Licence (full or
provisional). However, where a customer is unable to provide one of
these documents, you must continue to request two forms of
identification as detailed on the application form. Original
documents or certified copies must be sent to C&G with the
application form.
Identity Verification Certificate (IVC)
We like to make things easy for you and our Identity
Verification Certificate (IVC) does just that.
Click here to view the IVC. If we accept the IVC we may
request further copies of ID.
The IVC is NOT acceptable and should not be submitted in the
following circumstances:
- The original or certified copies of identity are required.
- The application involves a first time buyer - then ID must be
provided for all customers. However, if joint customers live at the
same address there is only the need to provide address ID for one
of them.
Q & As
Q. I have a joint application and the first
customer has provided a current UK passport for ID purposes, but
the second customer doesn't have a UK passport or a UK photocard
driving licence. What should I do?
A. Accept the current UK passport as ID for the
first customer, but the second customer must provide two forms of
identification as he/she doesn't have either of the documents
listed.
Q. A new client has provided a UK paper driving
licence to confirm his identity. Is this acceptable?
A. Only current UK photocard driving licenses
(full & provisional) are acceptable. If your client provides a
UK paper licence you may accept this for name ID but the client
will also need to provide a document confirming their address.
Q. The UK photocard driving licence has a
different address to the mortgage application form because the
client has recently moved into a temporary address. Is this
acceptable?
A. Refer to your local Business Development Manager for
guidance.
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Customers porting
The following applies to all porting requests:
Where the current mortgage completed on or after 1 November
2008
- Customers porting their product must return to C&G within
an eight week period.
- Where the customer chooses to port their product and their new
mortgage completes on the same day as their old mortgage redeems,
then no Early Repayment Charge (ERC) will be charged.
- If the customer’s new mortgage doesn’t complete on the day
their old mortgage redeems, then any ERC payable must be paid on
redemption of the old mortgage. The ERC will be refunded on
completion of the new mortgage. Provided this takes place
within the eight week period.
- If the customer moves house within the last 12 months of their
ERC period, the customer must pay any ERC due in full.
Where the current mortgage completed before 1 November
2008
- Customers porting their product will be allowed a 12 month
period to return within.
- C&G will waive any ERC due for customers moving house
within the last 12 months of their ERC period.
- Sub accounts - If the customer has a number of
sub-accounts and one of these sub-accounts
completed before 1 November 2008, then the total amount ported will
benefit from the concessions given in the two bullets directly
above.
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