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.
Customers within five years of retirement
- 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, although any
term exceeding 25 years should be considered carefully.
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Personal Deposit
The customer must have a personal stake in the
property which is not represented by a loan.
Family and gifted deposits
The following means of deposit are acceptable
providing they are not repayable:
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Use of funds
Unacceptable use of funds:
For buy-to-let policy on capital raising please see the capital raising on a buy-to-let
property section
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Index
Maximum LTV
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Application Type
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Maximum LTV
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House purchase*
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Interest only – 75%
Repayment – 90%
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Main residence remortgages*
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Interest only – 75%
Repayment borrowing:
£5,000-£500,000 – 75%
£500,001-£2,000,000 – 80%
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| Additional borrowing* |
Interest only – 75%
Repayment – 80%
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| New builds (including flats) |
Interest only - 75%
Repayment - 80%
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Buy-to-let
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Interest only – 75%
Repayment – 75%
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| Buy-to-let (New build) |
Interest Only – 65%
Repayment – 65%
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| Holiday/Second Home |
Interest only – 75%
Repayment – 75%
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Holiday/Second Home (New build)
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Interest Only – 65%
Repayment – 65%
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| Expatriate |
Interest only – 75%
Repayment – 75%
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*Interest Only / Repayment Allowances
Please see our current product range for full details of our
maximum LTV.
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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Additional borrowing
- 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.
- For all additional borrowing the maximum LTV
is 80%.
- For additional borrowing that takes the total
borrowing above 75%, the new borrowing must be on repayment
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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 60%
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 originals, on headed paper and dated within the
last 18 months. Online prints of tax returns (SA302s) are not
acceptable.
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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Identification of the customer
Documents required for new customers
Each new customer must be positively
identified in accordance with the Money Laundering
guidelines (JMLSG). It is a legal requirement for every
new customer to be identified, by providing appropriate
documents. Usually two documents are required, one to
confirm the customer’s name and the other to confirm their address
– although there are certain documents that are acceptable on their
own for proof of both identity and address. We’ve detailed
documents that are acceptable later in this section.
Your role
You must see the original document(s), make a copy which you
check and certify as a true copy of the original and send the
certified copy(ies) to C&G with the application form. We will
retain the copy(ies) for future reference.
To simplify the process, it may be possible for you to complete
an Identity Verification Certificate (IVC), which places the
responsibility on you to retain certified copies of the customer’s
identification documents. Again, please see later for more on
this.
Single items of
identification
The documents that we can accept on their own for proof of
both identity and address are listed in the ‘Single items of
identification’ table below. For example, you may accept either a
current UK Full Passport or a current UK Photocard Driving Licence
(please note: the counterpart licence is not acceptable on its
own).
If you can provide one of these documents,
there is no need to give a secondary form of ID.
Single items of identification -
acceptable documents
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Document
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Identification
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Address Verification
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EU/EEA Driving Licence
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EU/EEA Identity Card
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Firearms/Shotgun Certificate
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Northern Ireland Voters Card
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UK and Non UK Passport
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UK Driving Licence
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Young Scot Card
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Two items of
identification
Where a customer is unable to provide one of the documents from
the single item list above, you must continue to request two forms
of identification. Acceptable documents are shown in the ‘Two items
of identification’ list below.
For joint customers who are living at the same address, proof of
name is needed for both applicants, but address ID is needed only
for the first-named applicant.
A document can only be used once throughout the whole
application process; ie. used once for either address verification
or for identification.
Two items of identification -
acceptable documents
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Document
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Identification
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Address Verification
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Bank, Building Society or Credit union
Statement
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Benefits/State Pension Notification Letter
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Blue Disable Driver’s Pass
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HM Revenue & Customers Correspondence
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HM Revenue & Customs Tax Notification
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Local Authority Tax Bill
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Local Council Rent Card / Statement
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Mortgage Statement
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Utility Bill / Utility Statement or a
certificate / Letter from a Supplier of Utilities
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Guidance on
how to check and certify the documents:
Check the
- photograph appears to be that of the person presenting it
- date of birth appears to match the appearance of the person
presenting it
- name and date of birth match details on the mortgage
application form
- signature appears to be the same
- document has not been tampered with
- document is valid and had not expired
- address matches that held on the mortgage application form
To certify
- Stamp the photocopy with your company stamp
- Write ‘original seen’
- Date the photocopy
- Sign over the stamp
Identity Verification Certificate (IVC)
To simplify the process you can complete an Identity
Verification Certificate (IVC) which places the responsibility on
you to retain the certified copy(ies) of the customer’s
identification document(s).
An IVC is not acceptable in the following circumstances and
certified copies of the identity documents need to be submitted
with the application:
- First time buyers
- When identity documents are requested as part of the
application process.
Please note you will be asked to provide copies of the
identification taken if Lloyds TSB receives a court order, or
request made by audit. Copies will be required within 7 days.
Click here to view the IVC.
Identification required for existing
customers
If your client(s) already have a Lloyds TSB /
C&G account additional identification is not usually required,
however please record their existing account numbers.
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Credit scoring
Credit scoring takes account of information from three sources:
the information provided in your client's application; information
provided by credit reference agencies; and information that may
already be held about your client by companies in the Lloyds
Banking Group.
The credit scoring system will consider a range of information from
these sources to make an overall assessment of your client's
application. This assessment is based on an individual's repayment
history and experience that has been gathered over many years of
providing credit to customers.
The types of information that will be considered before agreeing a
mortgage include:
- your client's occupation
- employment history
- income
- conduct of previous loans with companies in the Lloyds Banking
Group
- information obtained from credit reference agencies.
The Lloyds Banking Group believes that credit scoring is a fair
and impartial system because it does not single out a specific
piece of data as the reason for declining your client's
application. The credit scoring methods used are regularly tested
to ensure they remain fair, effective and unbiased.
For further information about credit scoring for your client you
can download our guide to credit
scoring.
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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 expatriates 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
those resident in the Channel Islands, Isle of Man and
Republic of Ireland.
- 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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Porting
LTV Limits
Existing customers porting like for like with
no additional borrowing are able to
exceed 90% LTV maximum, subject to referral to underwriters.
Existing customers porting their current terms
and conditions and taking additional borrowing that will take
the total LTV over 75% must have the additional
borrowing on a repayment basis. If the combined borrowing is
less than 75% LTV, then it can be either interest only or repayment
or a combination of both.
The following applies to all porting requests:
Where the current mortgage completed on or after 1
November 2008
- Customers porting their product must take out another
C&G mortgage 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.
- The ERC will be waived for any customers moving house
within the last 12 months of their ERC period, as long as they are
porting the same amount or greater.
- 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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