Criteria

The facts you need to know

On this page

We aim to provide all the information you need to know here. If there's anything you can't find call our Intermediary Support Team on 0345 845 0110.

Application

  • A DIP states how much we can lend and is valid for three months, subject to a valuation and the information supplied being correct.

  • The details of the customer’s bank account from where the mortgage will be paid should be keyed at application.

    We'll require a Direct Debit mandate to be completed, signed and sent to us for all applications.

    The Direct Debit must be set up from a personal current account in the applicant's name. We do not accept payments from a savings, third party or business account.

  • Applications involving finder's fees are not acceptable.

    A finder's fee is a fee or commission paid by a seller to a third party (such as an investment club) for finding or introducing a buyer. It does not include the normal fee or commission payable to any estate agent handling the sale.

  • We’ll always collect the first payment on the 1st of the month in the month after the first full month after the mortgage completes. For example, if the mortgage completes on the 1st of June we’ll collect the first payment on the 1st of July. If the mortgage completes on the 2nd of June we’ll collect the first payment on the 1st of August.

    The first payment is usually higher than the rest of the monthly payments. This is because it includes interest charges from the day we release the money to the end of the month, plus the first full monthly payment.

    We’ll collect ongoing monthly payments on the 1st of each month. If the 1st falls on the weekend or on a bank holiday we’ll collect the payment on the next available working day.

    How do you calculate the first payment?

    The first monthly payment is made up of interest charges from the day we release the loan to the end of the month, plus the first monthly mortgage payment.

    Example:

    Loan How we calculate June interest £ First payment due on 1 August

    Repayment loan of £60,000

    Interest rate: 5.49% fixed

    Money issued on: 25th June

    60,000 x 5.49% x 6 days (25th-30th June) 365 days*= £54.15

    54.15 June interest

    366.47 July monthly payment

    420.62 Total payment

    *Note that in a leap year we’ll still calculate the payment using 365 days.

    When will you tell the customer about this?

    On the first working day after we release the money, we’ll write to tell the customer when we’ll collect their first and subsequent monthly payments.

    The letter will also give a summary of other information we agreed when you applied for the mortgage, such as whether it’s an interest-only mortgage, a repayment mortgage or a combination of the two. If the mortgage account is made up of different parts, the letter will also explain:

    • how we have set these up; and
    • how the monthly payments on each part make up the total monthly payment we’ll collect.
  • The remortgage package is not available if there's not currently a mortgage on the property.

    One of the applicants must have owned the property for at least six months prior to the application.

    Typically the legal work involved in a remortgage is needed by the lender in relation to our financial interest in the property as security for our loan and for standard remortgages there will be no charge.

    For more complex transactions, such as property title transfer or registration of properties in England and Wales where the property requires first registration in HM land registry, our solicitors will contact the applicant(s) to arrange payment.

    Remortgage Service

    This is a streamlined remortgage with reduced cost. The key benefits of the service are:

    • the criteria for free conveyancing is that the application needs to fall within normal lending limits e.g. Max LTV 90%
    • we use a panel of specially selected conveyancers and we’ll pay our legal costs for the remortgage transaction only.

    Conveyancers Actions

    • On receipt of our instructions the conveyancer will write to the applicant introducing themselves and enclosing a questionnaire for the customer to complete and return in a pre-paid envelope. This will include a contact name and telephone number for the customers to ring.
    • Once the offer has been issued the applicant can obtain progress reports from the conveyancer if required. The completion date for the remortgage can only be agreed with the conveyancer once the offer has been issued.

    Where applicants use their own solicitor instead of ours, we'll offer £300 cashback.

    Shortfalls

    The conveyancer will request a provisional redemption statement from the current lender giving an approximate repayment date.

    This provisional repayment figure will, in most cases, highlight any potential shortfall much earlier in the process. If a potential shortfall is identified, the conveyancer will contact the applicant directly.

    The applicant may wish to pay the shortfall from personal funds. The conveyancer will advise that an accurate shortfall figure will be provided nearer completion and no money should be sent to the conveyancer until this is requested. If the customer does not wish to pay the shortfall from personal funds, the conveyancer will advise the applicant that they should contact their Broker to discuss other options. Depending on the applicant’s circumstances this could, for example, be to increase the amount of the loan.

    Additional Services

    These must be instructed with the conveyancer directly who will also confirm the costs associated.
    • Transfer of Equity. If there is someone named on the title in addition to the borrower, or one of the borrowers is not named on the title, a transfer of equity will be required. This may delay the remortgage process.
    • Deed Of Postponement.
    • Easements.
    • Change Of Name.
    • Death of a Borrower.
    • Merger or Mortgage of the Freehold Reversion.
    • Transferring a property title from the Sasines Register to the Land Registry in Scotland which is considered more complex by the conveyancer. Some examples are where:
      • plan report states either an overlap or shortfall between the legal and occupational extent
      • title is complex with split-off writs, exceptions and additions (essentially requires a full examination of title to draft the security and obtain a relevant deed plan)
      • property is a flat or part of a tenement block and there are common parts etc, obtaining of neighbouring titles would be required
      • property is rural and copies of neighbouring titles are required to check servitudes/access rights etc.

    These are some high level examples considered by conveyancer panel firms as most likely to occur (but are not limited to these examples). The specific costs associated to complex cases/scenarios will vary, and panel firms will apply an hourly rate and discuss all matters with applicants up front prior to commencing any further with the transaction.

    Leasehold properties

    If the tenure of the property is leasehold, the applicant will be responsible for any charges payable to the landlord under the terms of the lease. If the applicant does not have a copy of the lease, conveyancers will get one from the Land Registry, which will incur a cost for the applicant.

New Customers

  • If we cannot complete electronic verification, we need to ensure that the customer is who they say they are from documents which confirm their identity and where they live.

    Depending on the type of verification document provided, the customer will need to provide either one or two documents. FCA registered firms must ensure that documentation relied upon to verify aspects of a customer's identify is copied and retained. Sufficient and accurate information must be recorded on our application system. You must also correctly indicate if the case is face-to-face or non face-to-face.

    We reserve the right to request copies of identity documents.

    Two separate documents must be provided to verify the customer's name, residential address and date of birth.

    Documents must be originals and can only be used once throughout the whole process; i.e. used once for either address verification or for identification.

    Single Identification Documentation

    Document Identification Address Verification
    EU/EEA Driving Licence (some not applicable) Yes Yes
    EU/EEA Identity Card (some not applicable) Yes No
    Firearms/Shotgun Certificate Yes Yes
    Northern Ireland Voters Card Yes Yes
    UK and Non UK Passport (some non UK passports not applicable) Yes No
    UK Driving Licence - Photo Card Yes Yes

     

    Non Single Identification Documentation

    Document Identification Address Verification
    Bank, Building Society or Credit Union Statement No Yes
    Benefits/State Pension Notification Letter Yes No
    Biometric Residence Permit Yes No
    Blue Disabled Driver's Pass Yes No
    HM Revenue & Customs Correspondence No Yes
    HM Revenue & Customs Tax Notification Yes Yes
    Local Authority Tax Bill No Yes
    Local Council Rent Card/Statement No Yes
    Mortgage Statement No Yes
    Solicitors Correspondence No Yes
    Utility Bill/Utility Statement or a certificate/Letter from a Supplier of Utilities No Yes
    Young Scot Card Yes No
    Credit Card Statement No Yes
    Tenancy Agreement No Yes
  • Our Foreign National Policy applies to applicants from outside the EU/EEA. The following restrictions apply.

    Product Lived in UK 0 – 12 month Lived in UK 12 - 24 months (Max LTV) Lived in UK 25 - 60 months (Max LTV) Lived in UK > 60 months (Max LTV)
    Professional Mortgage (permanently employed) Not available Up to 60% LTV Up to 75% LTV Up to 90% LTV
    Professional Mortgage (contracts – medical doctors only) Not available Not available Up to 60% LTV Up to 75% LTV
    Professional Mortgage (self employed) Not available Not available Not available Up to 75% LTV
    Flexible Mortgage (permanently employed) Not available Up to 60% LTV Up to 75% LTV Up to 85% LTV
    Flexible Mortgage (self employed or contract) Not available Not available Not available Up to 60% LTV
    We only accept income paid in sterling.
    • The minimum requirement of 12 months in UK can be evidenced from the following sources, through the Experian bureau data, or from the employment reference.
    • Permanent employment status will be evidenced from the employment reference.
  • If we ask you to provide ID documents, you must ensure that the following is present to satisfy certification requirements. This must be recorded by the FCA Registered Mortgage Intermediary:

    • name of the certifier;
    • signature of the certifier;
    • date of certification, which must not be older than three months at the time of the application and;
    • written confirmation from the certifier stating "I hereby certify that this is a true and correct copy of the original document as sighted by me" (variations are acceptable).

    Documents must be certified by an FCA registered mortgage intermediary.

Property

  • The property must meet minimum criteria. Must be habitable, readily saleable, structurally sound and be able to have buildings insurance arranged upon it. The mortgage advance may be wholly or partially retained pending completion of works required to bring the property to a suitable condition for lending.

  • Property acceptability is based on a satisfactory valuation report from the bank's appointed valuer. Non-standard construction will be assessed on individual merit. Certain types of pre-cast reinforced concrete (PRC) construction are designated defective and may not be acceptable unless repaired.

  • Applications that involve a distressed sale or a sale and leaseback are not acceptable.

  • We will lend subject to the valuer confirming the property is suitable mortgage security and providing a present condition valuation figure. To assess the property the valuer will require a report outlining the issues and a quote from a treatment company who must either be a member of the Property Care Association or be able to offer a warranty backed treatment plan. If treatment is advised and where possible, then this is often over 3-4 years.

  • An initial occupancy/new build is any property being occupied and/or sold for the first time on the open market in its current state and includes converted and refurbished properties.

    These will fall into one of four categories:
    • newly-built property
    • re-furbished property i.e. refurbishment of an existing residential property, typically a refurbished property will be considered as initial occupancy where the vendor is a builder/developer and the property has been vacated to allow for the refurbishment to be undertaken
    • newly-converted property i.e. conversion of an existing non-residential property, e.g. an existing mill converted into flats
      A property, either new or converted (as above), that has been tenanted and is now offered for sale by the builder/developer
    • maximum LTV on new build properties (houses and flats) is 85% (75% for second home loans).
    Property must be subject to one of the following requirements:
    • subject to a Building Standards Indemnity scheme as listed below
    • being sold by a Development Corporation or a Local Authority where the body concerned gives an acceptable guarantee
    • a single detached property (either self-built or otherwise) where construction is monitored by a consultant employed directly by your customer
    • a property built by a self-build group where construction is monitored by a consultant employed by that self-build group
    • a property forming part of a small solely residential development comprising not more than 15 units in total where construction is monitored by a consultant employed by the builder or developer. (If flats/maisonettes are involved, each individual flat/maisonette counts as one property)
    • developments containing more than 15 units need NHBC or another acceptable form of building standards indemnity.

    All new build properties when being purchased for the first time must either have a warranty from a provider (see below for acceptable warranty providers), or a professional consultant's certificate in a format provided by UK Finance signed by a person with an acceptable qualification.

    Where developments contain more than 5 units we may place a limit on the percentage of properties we will lend against on that particular site. Where the limit has been reached, the valuers will decline to carry out a valuation and will advise accordingly.

    Acceptable Warranty Providers:
    • ABC+
    • Aedis Warranties LTD
    • FMB Insurance/Build Assure
    • One Guarantee
    • NHBC
    • Premier Guarantee - includes the LABC New Homes Warranty and LABC Hallmark Scheme
    • Building Life Plans Ltd (BLP)
    • CRL Management Limited - previously known as Construction Register Limited (CRL)
    • Buildzone
    • Checkmate
    • Advantage HCI
    • Global Home Warranties
    • International Construction Warranties (ICW)
    • Protek
    • Q Assure Build 

    Confirmation of what warranty is in place is required. This should be received prior to offer.

    Builder cash incentives include but are not limited to deposit contributions, cash-backs, contribution to legal fees/stamp duty, mortgage subsidies.

    Builder cash incentives will typically be acceptable provided the value of these does not exceed 5% of the lower of purchase price/valuation. Cash incentives in excess of this amount may result in a reduction in the maximum loan available. All builder cash incentives must be declared at the point of sale.

    All lending decisions are based on valuation or purchase price (whichever is lower).

  • If the purchase property address changes once a mortgage application has been made, and the customer’s original mortgage product has been withdrawn, a new product from the current range must be selected.

    If the property being purchased is not changing but an amendment is required to the address keyed e.g. property number or street name this must be amended by us prior to completion. You should contact us to make this change.

  • Let’s your customer apply for a mortgage on a property to be used primarily as a holiday or second home.

    • We will allow 1 residential plus 3 ‘other’ properties with Lloyds Banking Group (across BTL and Second Home Loan).
    • We will consider a maximum portfolio value of £2m and a maximum LTV of 75%.
    • We will not accept Right to Buy, Guarantor applications or Builders Incentive Schemes.
    • Occasional letting is allowed up to a period of four months with special conditions placed on the mortgage. If the Second Home is for let for more than four months this will be treated as a consent to let.
    • Income must cover all mortgage commitments and the additional expense of running second home properties.
    • Minimum applicant age of 18 years.
    • Applications where a tenancy agreement is in place between applicant and family member cannot be accepted - the mortgage can be used where a family member will occupy the property provided there is not a formal tenancy agreement.
    • Intended to regulate development or proposed use of property.
    • Range is varied but may include:
      • limiting occupation to a certain category of occupant - local residents, first time buyers, specified age requirement, specified employment types
      • restricting use of property - tied to agricultural use, restricting residential occupation to certain time limits, for example, 10 months of the year.
    • The impact on acceptability depends upon the impact of the restriction. There may be a strong local demand for the property from qualifying purchasers.
    • Broadly, restrictions that mean a property must be used for agricultural use will be unacceptable.
    • The valuer will determine the impact on the suitability of the property for lending and the conveyancer will determine whether the purchaser/owner complies with the obligation, advising the bank of any issues that may impact the lending.
    • Where the restriction limits the time a property can be occupied this will only be acceptable for holiday homes /second home loans and subject to the valuer confirming the property is suitable for lending.
  • Sub-sales and back-to-back transactions are not acceptable.

    A sub-sale occurs when a property is bought and then sold on within six months, i.e. the borrower is buying the property from someone who has themselves bought the property less than six months before. The date of registration at the Land Registry is how we determine the length of ownership.

    This means that the current vendor must have owned the property for at least six months before we can accept an application to purchase that property, unless the property has been inherited.

    A back-to-back transaction is a type of sub-sale where the intervening seller buys from the original seller and sells on to the borrower on the same day or within a few days. We also regard as sub-sales, cases where the seller acquires the freehold (or superior leasehold) title to the property, which they then immediately sell on to the borrower by the grant to them of a lease (or sub-lease).

    The following cases are exceptions where it is acceptable for the property to be sold on within six months of acquisition by the seller.

    Where sales are by:

    • a personal representative of the registered proprietor; or
    • an institutional mortgagee exercising its power of sale; or
    • a receiver, trustee-in-bankruptcy or liquidator; or
    • a developer or builder selling a property acquired under a part-exchange scheme.

    We will also accept Inherited properties where the applicant is a beneficiary but has not owned the property for 6 months. The conveyancer will be responsible for ensuring the application meets the acceptable criteria.

    Applications which involve assignable contracts or irrevocable powers of attorney in favour of intervening sellers are not acceptable. Any other structure to the transaction which has a similar effect should be reported to us.

    • We do not lend on freehold flats unless freehold reversion/Tyneside arrangements apply and there are no more than four flats in the building. In addition we accept Coach house freehold flats where the garages underneath are subject to a long lease.
    • For leasehold property there must be a minimum of 70 years remaining on the lease at application. Shorter lease terms are only accepted on certain central London estates and subject to specific criteria.
    • Commonhold property is not accepted.
  • Each application will be assessed on its own merits although there are some property types which are specifically excluded.

    Further advice can be found here.

    • Timber or metal framed buildings where the cavity, between frame & cladding, has been retrospectively filled with an insulation material.
    • Concrete walls as built in Cornwall or Devon before 1950 (1960 for postcodes PL12, 13, 14, 15, 17, 18, 22 & 23) where valuer has recommended a Mundic report and test of the concrete has classified the concrete in either class B or C.
    • Unrepaired, designated defective properties under the Housing Act 1985, Housing (Scotland) Act 1987, Housing (Northern Ireland) Order 1986.
    • Flats or maisonettes of large panel system type unless acceptable structural appraisal on the whole block.
    • Load bearing panels of asbestos or gypsum plaster construction.
    • Properties which are structurally unsound and properties which are uninsurable.
    • Property must be assessed as an individual residential property intended for owner occupation.
    • Farms or property with land that is subject to commercial agricultural use, commercial property and timeshare are not acceptable.
    • Limited incidental business use may be acceptable subject to property retaining residential status.
    • Live/work schemes may be acceptable on mainstream lending only subject to compliance with planning condition and ‘work’ element using less than 40% of the property.
  • Before we can make an advance, we must have a mortgage valuation that takes into account any factors likely to materially affect the value.

    The valuation figure is currently valid for six months.

    Properties for sale in England, Wales and Northern Ireland must have an Energy Performance Certificate which details the energy rating of the property. The Energy Performance Certificate is not a replacement for a valuation or property survey.

    In Scotland, most sellers must provide a Home Report, part of which will include a survey (Scottish Single Survey) and may include a Generic Mortgage Valuation Report (GMVR) which the purchaser and any eventual Lender may rely on.

    Where an application relates to a property still being constructed, the valuer will provide a valuation figure based on the assumption that construction is completed to a satisfactory standard.

    The appropriate Special Condition will be included in any Mortgage Offer.

    For full details about the cost and types of valuation available through our surveyors, visit Charges and Valuation Fees

lending

  • Scottish Widows use affordability as a way of assessing how much they will lend. Please refer to our affordability calculator

    PLEASE NOTE: This calculator will give you a broad indication of the amount we are able to lend. It's designed for guidance purposes only.

    For all applicants we must ensure that your clients can afford the monthly payments and the application will be assessed on this basis. The table below details the loan to income multiples we’ll typically consider.

    Income (sole/joint) Loans £0 - £500,000 Loans > £500,000
    0 - 75% LTV 75.01% - 90% LTV 0 - 75% LTV 75.01% - 90% LTV
    < £25,000 4.49x single or joint income

     

    4.49x single or joint income

     

    4.00x single or joint income

    £25,000 - £75,000 4.75x single or joint income
    £75,000 5.00x single or joint income 4.75x single or joint income

    The actual loan amounts are subject to our usual underwriting requirements and an accurate estimation of credit score. For the Affordability Model to accurately reflect an applicant's ability to support a loan, it is essential that all information collected accurately reflects committed expenditure. The Affordability Model will automatically take into consideration a number of commitments that all our customers will have to pay. These are the following:

    • housekeeping (including food) 
    • transport costs
    • insurance
    • family leisure
    • savings/Insurance/Pensions
    • council tax
    • utility bills
    • TV license
    • internet and multimedia
    • mobile phones.

    As these items are already considered, they therefore do not need to be keyed as commitments.

    Commitments

    Regular essential committed expenditure which is in addition to the amounts taken into consideration by the affordability model listed above. The types of expenditure will be specific to the individual applicant, for example payments for a holiday home or timeshare, maintenance payments, club membership, expensive hobbies/leisure activities or pay school/university fees for grandchildren.

    When collecting details of the applicant’s commitments, please include details of all of the following:

    • any credit commitments, for example Loans, Credit Cards, Car Finance or Overdrafts
    • other expenditure, for example an expensive hobby or leisure activity
    • any regular committed expenditure that is considered to be essential and that the applicant wouldn’t be able or prepared to give up if they had to re-prioritise their expenditure in the future to meet their mortgage payments.

    The commitments are captured at an application level rather than at an individual applicant level.

    It is not unusual for someone to forget a credit commitment or not appreciate that a commitment is relevant. For example, common omissions include: Buy Now Pay Later finance agreements, car loan repayments and any commitments an applicant is acting as guarantor for.

    The system will perform a ‘reasonability check’ of declared commitments against the credit details supplied by Experian. If Experian indicates a higher commitment figure, this will be used in the calculations.

    Affordability must also include future changes to income and expenditure - if there are any other planned future credit commitments that the applicant(s) will be taking, these need to be detailed.

    Costs which are not essential and could be cancelled should not be keyed as commitments.

    Where a customer fails on affordability there are options to extend the term (up to retirement), extend term into retirement (subject to evidence of adequate retirement income) and on occasion, a further review to confirm we feel it is appropriate for the customer to lend into retirement. Where the application is not affordable it will be declined.

  • Applications which involve assignable contracts or irrevocable powers of attorney in favour of intervening sellers are not acceptable. Any other structure to the transaction which has a similar effect should be reported to us. Assignable contracts allow the original buyer to sell the property before legal completion, by assigning the contract to buy the property to a new buyer after contracts have been exchanged with the developer.

  • The Bankruptcy question should be answered as yes if your customer has had a bankruptcy/IVA/Debt Management Arrangement or Debt Relief Order within the last 6 years or still have an outstanding Bankruptcy Restriction Order.

  • CCJs are generally taken into account in credit scoring however, background details are required.

  • All applications will be credit scored. If we turn down an application, customers have a right to appeal. Whilst we’ll always reconsider carefully, without new information it is very unlikely that we will be able to change our decision.

  • All customers must make a minimum personal deposit for the property relevant to their individual credit score, product or scheme. No element of this deposit should be represented by a personal loan.

    Where evidence of deposit is requested, the following documents are acceptable:

    Gift from family

    You should obtain a letter written by the family member that meets all of the following requirements:

    • addressed to Scottish Widows Bank
    • dated within the last three months
    • details the person/people gifting the deposit and the current name and address of the applicant(s), together with the property being purchased
    • confirms the relationship between the person/people making the gift and the applicant(s). They must be a family member. See definition of family member below
    • details the family member's full address and is signed
    • confirms the amount of the deposit, that it isn't repayable and that the family member will hold no interest in the property following completion of the mortgage
    • the source of the deposit.

    You should also provide a UK bank statement or UK passbook from the family member or applicants, showing the deposit funds in their account. Alternatively, the family member or applicant may provide a letter from their UK bank confirming that the funds are available. Additional statements may be requested where required.

    If any of the deposit is gifted, this should be chosen as the source of deposit when keying the application.

    The definition of a family member is someone who is related to at least one of the applicants:

    • by birth/blood relative (for example an aunty has to be via blood and not marriage)
    • by marriage or civil partnership (including step children, adopted children and in-laws)
    • as 'Common Law' partners or co-habitees.

    Gifts from friends or employers, developers/landlords, cousins, or foster/guardian children are not acceptable.

    Savings

    You should obtain:

    • the latest three months' UK bank statements or a UK passbook covering the latest three months' transactions showing the applicant's name, account details (sort code and account number for bank statements or account number for passbooks) and company name, or the latest annual statement for longer term savings plans
    • the statements or passbook should be in the name of at least one of the applicants
    • the latest closing balance must cover the total deposit required
    • any recent large or unusual deposit may require clarification to establish the source.

    Vendor Deposits and Cashbacks (Non New Build Properties) - Vendor Gifted Deposits are an unacceptable source of deposit for any non new build property.

    This does not impact buyers who are receiving gifted deposits to purchase New Build Properties or concessionary purchases.

  • We do not currently accept new business applications from Expat residents.

  • All loans arranged where the capital element is not included in the monthly payment, including those that are part capital and interest repayment, part interest only, must have a plan in place to repay the capital at the end of the term. This includes new loans, further advances and product transfers.

    As a responsible lender, it is important for us to see evidence of the repayment plan for interest only mortgages so documents relating to the repayment plan must be received before a new mortgage offer can be considered.

    You can see a list of our current acceptable repayment plans on the interest only criteria section.

  • Maximum LTV: 90%.

    85% for remortgage with capital raise.

    The following restrictions apply for borrowing above £750,000:

    • >£750,000 to £1m 85%
    • >£1,000,000 to £2m 80%
    • >£2,000,000 to £5m 70%
    • >£5,000,000 50

    New build properties  - 85%.

    Up to 75% LTV can be interest only or repayment.

    Over 75% and up to 90% LTV the full balance must be on a repayment basis.

    Further Advances are available up to 85% LTV (75% for interest only), based on the current value of the property. Existing customers will not be considered for a Further Advance until 6 months have elapsed since completion of the original mortgage.

    • Minimum term: 5 years.
    • Maximum term: 40 years, or to age 80 if less.

    If the mortgage term extends beyond the lower of either a maximum working age of 70 or anticipatedor anticipated retirement age, we will assess affordability on both current sustainable income and expected retirement income.

    • Minimum age 18 years.
    • Maximum retirement, unless retirement income meets affordability rules.

    The maximum age at the end of the mortgage term is 80 years for repayment mortgages, and 70 if any part of the mortgage is on interest only.

  • Applications where previous mortgages have been in arrears will be considered on an individual basis.

  • Where a customer wishes to raise monies on a property they own outright, properties must be registered with the land registry in the owner's name(s) for at least six months before any further lending will be considered. The only exception to this rule is an inherited property where the applicant is a beneficiary.

    Loans on mortgage free properties must be keyed as ’Remortgages’ and the broker should answer ‘No’ to the following question at the Mortgage Details section “Do you currently have a mortgage on the property on which you are applying for loan on?”. The remortgage package is not available if there's not currently a mortgage on the property.

    The maximum loan available is 90% LTV.

    How to key

    To ensure that loans on mortgage free properties are processed correctly, the case should be keyed as follows:

    • select Remortgage/Mortgage Free in the dropdown list for 'Mortgage Purpose'
    • select 'No' in the dropdown list for the question “Do you currently have a mortgage on the property on which you are applying for loan on?”
    • complete the rest of the application as standard

    A valuation fee will be payable on these applications.

    • Maximum of four applicants.
    • Two incomes are taken into account for affordability.
    • Discretion can be used if third income is required.
    • For Bonus/Cash/Sale Of Mortgage Property interest only repayment plans, only the income from the first two applicants will be used to determine the income qualifying criteria.
  • Simultaneous sale and purchase is the preferred route, but we recognise that this is not always possible.

    Existing property is for sale but will not be sold before new mortgage completes

    • The existing mortgage payment must be keyed as a credit commitment and will be included in the affordability calculation.

    Existing property to be rented out

    • The mortgage payment must be keyed as a credit commitment (the mortgage type for the commitment needs to by keyed as ‘Buy to Let’). The rent received should be keyed as 'Rental Income (if rental property)’.
    • You must ensure your customer(s) have owned their property for at least six months before submitting a re-mortgage application.
    • Maximum LTV for remortgages without additional borrowing is 90%. For remortgages with additional borrowing or capital raising the maximum LTV is 85% (subject to product availability or unless stated otherwise).

Income

  • Foreign currency income will not be accepted for new mortgage or remortgage applications for new and existing customers, including porting, transfers of equity and further advances.

    The only exceptions to this are further advance applications, for essential repairs to the mortgaged property, and product transfers.

    Foreign currency income is any income other than sterling received by a customer. Foreign currency income paid into a UK bank account and subsequently transferred to sterling is still considered to be foreign currency.

  • Sub-contractors, fixed/short term contracts and agency workers

    Applications will be considered from the above employment types if the customer has a current continuous employment of 12 months or more with six months of the contract remaining or the customer has two years continuous service in the same type of employment.

    Evidence of their employment track record may be required.

    Customers should be treated as self employed if they pay their own tax or sub contract to more than one company.

    IT and other contractors

    All applicants must have a current continuous employment of 12 months or more with six months of the contract remaining or two years continuous service in the same type of employment. For IT contractors on any income and other contractors whose income is more than £500 per day or £75,000 per annum: whether employed or self-employed, we accept the gross value of the contract as evidence of income.

    Construction Industry Scheme Contractors (CIS)

    Applications from customers employed on a Construction Industry Scheme (CIS) Contract will be considered. An average of the latest three months income should be used and evidence of the income for these applicants must be provided.

    Zero hours contracts

    Applications from customers employed on a zero hours contract will be considered where the customer has been employed on a zero hours contract for a minimum of 12 months. If the customer has been employed on a zero hours contract for less than 12 months, the application should be declined unless there is alternative income or sufficient income from an additional applicant. This applies even if the customer was previously employed on a guaranteed hours contract.

    The total of the last 12 calendar months income only will be used and all the income must be evidenced.

    Where the customer has been employed on a zero hours contract by different employers but for the same type of work, this can be considered continuous employment, and income documentation for 12 months will be required.

    Where the customer is employed by a nursing bank on a zero hours contract then the Nursing Bank Policy should be followed; refer to Employment Types.

    Probation

    Income from probationary employment is only used where the probationary period is part of a permanent contract. If the contract is purely probationary with the employer having the option to terminate the contract then this income cannot be used.

    It is important that probationary contracts are keyed accurately as follows:

    Where the applicant receives an offer of permanent employment and the contract states an initial probationary period e.g. three or six months, it should be keyed as 'permanent'. The income will be used in the affordability assessment.

    Where the applicant is offered a probationary contract, e.g. for three months, at the end of which the employer has the option to determine if a permanent contract will be offered, it should be keyed as ‘probationary’. The income will not be used in the affordability assessment.

    Professional Sports People

    Applications will be considered from Professional Sports People where either continuous employment of 12 months or more with six months of the contract remaining or two years continuous service (for the last two years as at the date of application) in the same type of employment can be confirmed.

    It is essential to establish that such individuals will have the ability to sustainably meet the monthly repayments as they near the end of their career or if their career should be ended abruptly due to injury.

    Funding from corporations/charities/sponsors is not an acceptable form of income.

  • The maximum age at the end of the mortgage term is 80 years for all lending.

    Future retirement income will need to be verified where the customer is taking a mortgage term which extends beyond their anticipated retirement age or a maximum working age, for which we will use 70, whichever is the earliest. Affordability will be assessed on the future retirement income. On occasions, a further review will be required to confirm we feel it is appropriate for the customer to lend into retirement.

    The applicant’s plans should be discussed in view of their occupation, and reasonability of working beyond state pension age should be documented where appropriate.

    The types of evidence which can be used to verify anticipated retirement income are as follows:

    • Private / Company Pension Forecast Statement dated within the last 18 months.
    • State Pension Statement dated within last 18 months which must be obtained by the customer directly as an actual statement with their name and address on it (this can be obtained from The Pension Service).
    • State Pension Forecast statement issued to the customer directly from The Pension Service with their name and address on it. Annuity Statement dated within the last 18 months.

    The types of evidence which can be used to verify Pension Income already being received are as follows:

    For State Pension, War Pension and Widows Pension

    • Latest month’s bank statement.

    For Company or Private Pension

    One of the following:

    • latest payslip
    • latest bank statement
    • latest pension statement/reference dated within last 12 months.
    • Employed - Current employment details collected.
    • Self-Employed - three years history requested however, where the business has been trading for less than three years e.g. one year self-employed and so self-employed income is not available for three years, we will still consider these applications. You must record all relevant years' income accurately on the mortgage application.
  • In cases where the customer has more than one job, we’ll consider the following when deciding whether or not to take the secondary income into account:

    • hours worked - are they sustainable?
    • are the roles/skills similar?
    • what is the distance between the jobs and the customers home?
    • how long has the customer been in both jobs?
    • is the salary consistent with the type of employment?
    • the number of days the customer works per week.
  • If any of the following applies, the customer must be keyed as self-employed:

    • where the customer has a shareholding of 25% or more
    • if joint customers own 25% or more between them, treat both customers as self-employed (both applicants need to hold a % share)
    • a sub-contractor who derives income from more than one contract
    • a customer has a partnership interest in a business, i.e. income is not PAYE, irrespective of the percentage shareholding
    • a customer owns a franchise
    • a customer employed by a Private Limited Company (LTD) who receives a salary (PAYE) and dividends as part of their remuneration package
    • a customer who is in a Limited Liability Partnership (LLP) and receives a share of Net Profits.

    For applicants who are classed as self-employed, you should capture all of their income under the field ‘net profit’. Whilst some self-employed income we allow is not truly 'net profit', we use this field in our affordability assessment and in our policy rules. For example if the customer is paid PAYE and dividends this can be added together and keyed in the ‘net profit’ field.

    Where the applicant has been self-employed for two years or more, the full two years income documentation must be provided.

    Acceptable Income Verification Documents

    Latest two years’ HM Revenue & Customs (HMRC) Tax Calculation accompanied by corresponding Tax Year Overviews – The year the Tax Calculation relates to and the Customer’s name/initials must show. Tax Calculations can be obtained from the customer’s online self-assessment account.

    The following details must be visible on the online Tax Calculation:

    • HMRC logo
    • Unique Tax Reference (UTR)
    • customer’s name
    • Tax year (most recent no older than 18 months old), and the following wording:
      • "This is a copy of information held on your official online SA tax account with HMRC", and
      • "Submission is 100% complete."

    Online tax assessments produced by accountants’ commercial software (accompanied by corresponding Tax Year Overviews) are acceptable provided they show the following:

    • Unique Tax Reference number
    • customer’s name
    • tax year (most recent no older than 18 months old).

    Tax Year Overviews – corresponding Tax Year Overviews must accompany Tax Calculations. The tax due for each tax year must exactly match the corresponding Tax Calculation figure for Income Tax and National Insurance due.

    Latest two year's full accounts – must be finalised and clearly show the net profit (for Sole Traders), share of net profit (for Partnerships) or salary & dividends (for Directors of Limited companies). Profit & Loss statements alone are not acceptable.

    The year end on all documentation must be the most recent and must not be dated more than 18 months before the date of application. Tax Calculations from the customer’s online self-assessment account. Tax Calculations must be accompanied by corresponding Tax Year Overviews and the figures for tax due must exactly match.

  • Income/Contract Type Verification document (preferred shown first alternative shown below) Criteria
    Ltd Company – Director/Shareholder - less than 25% wanting to use basic PAYE only - Treat as employed

    Latest payslip,(this applies whether the applicant is paid weekly or monthly).

     

    Hand written payslips are not acceptable.

     

    Employer's reference.

    Must show applicant & employer name, pay date, basic income, gross & net pay and any additional payments being used in affordability.

    Providing the applicant is NOT employed by a family business, on occasions where the customer is unable to provide payslips that fit the listed criteria, we are able to request an employer's reference to verify the income.

    Ltd Company – Director/Shareholder - equal to or greater than 25% wanting to use basic PAYE only - Treat as self-employed

    Last two years’ Tax Calculations accompanied by corresponding Tax Year Overviews.

     

    Latest two years’ Full Accounts.

    The year the Tax Calculation related to and customer’s name/initial & surname must be shown. Tax Calculations can be obtained from the customer’s online self-assessment account. The following details must be visible on the online Tax Calculations:

    • HMRC logo
    • Unique Tax Reference (UTR)
    • customer’s name
    • tax year (most recent no older than 18 months old), and the following wording:
      • “This is a copy of information held on your official online SA tax account with HMRC”, and
      • “Submission is 100% complete.”

     

    Online tax assessments produced by accountants’ commercial software (accompanied by corresponding Tax Year Overviews) are acceptable provided they show the following:

    • Unique Tax Reference number
    • customer’s name
    • tax year (most recent no older than 18 months old).

     

    Must be finalised, and clearly show the net profit (for sole traders), share of net profit (for partnerships) or salary & dividends (for director of Limited company).

     

    Profit & Loss statements alone are NOT acceptable.

    Ltd Company – Director/Shareholder -Irrespective of shareholding wanting to use basic PAYE (salary) & Dividends - Treat as self-employed

    Last two years Tax Calculation accompanied by corresponding Tax Year Overviews.

    Latest two years Full Accounts.

    The year the Tax Calculation related to and customer’s name/initial & surname must be shown. Tax Calculations can be obtained from the customer’s online self-assessment account. The following details must be visible on the online Tax Calculation:

    • HMRC logo
    • Unique Tax Reference (UTR)
    • customer’s name
    • tax year (most recent no older than 18 months old), and the following wording:
      • “This is a copy of information held on your official online SA tax account with HMRC”, and
      • “Submission is 100% complete.”

     

    Online tax assessments produced by accountants’ commercial software (accompanied by corresponding Tax Year Overviews) are acceptable provided they show the following:

     

    • Unique Tax Reference number
    • customer’s name
    • tax year (most recent no older than 18 months old).

     

    Must be finalised and clearly show the net profit (for sole traders), share of net profit (for partnerships) or salary & dividends (for director of Limited company).

     

    Profit & Loss statements alone are NOT acceptable.

    Employee of LLP - not equity shareholding partner (Treat as employed)

    Latest payslip (this applies whether the applicant is paid weekly or monthly).

     

    Employer's reference.

    Must show applicant & employer name, pay date, basic income, gross & net pay and any additional payments being used in affordability.

     

    On occasions where the customer is unable to provide a payslip that fits the listed criteria, we are able to request an employer's reference to verify the income.

    Projected income will be considered for doctors, dentists, solicitors (including LLP) and accountants (including LLP).

Existing Customers

  • Where the mortgage has been at least one month in arrears within the last three months, a further advance application cannot be accepted.

    The customer should be advised to bring their account up to date and be ‘arrears free' for at least three months before re-applying.

    This rule also applies to any standalone product transfers that you may wish to process, however, you can process the product transfer as soon as the account is up to date with no requirement to wait three months.

  • Tracker rates are linked to the Bank of England bank rate. This is announced by the Bank of England's Monetary Policy Committee (MPC). If the MPC decides to change the bank rate, we will change the tracker rate in line with it. This will be within 30 days of the publication of the minutes of the MPC meeting at which the decision to change the bank rate was made.

    At the end of the tracker rate period the tracker rate mortgage will cease to be a tracker rate mortgage and we will charge your client interest at Scottish Widows Bank standard variable rate.

    All variable rates are stated at their current levels and are subject to change.

  • Customers can apply for Consent to Let their property. If agreed, there is a fee of 0.5%. This fee is charged annually for short-term letting arrangements (not applicable for existing buy to let mortgages).

    The 0.5% is calculated on the total outstanding balance of the mortgage, including any further drawdownns, as at the 1st of the month in which consent is granted. The fee is non-refundable, even if the property is let for less than 12 months or the mortgage is redeemed in full.

    To apply for consent to let, customers must complete the Consent to Let Application Form (PDF) and return this to us.

    A consent to let would not normally be considered until the mortgage has been in place for six months (armed forces personnel are exempt from this rule).

  • We offer different types of mortgage products with different interest rates. With some of these there may be a charge if the customer repays all or part of the loan within a certain period of time.The Mortgage Illustration and offer letter give details of any early repayment charges that apply.

    Why do we charge them?

    We charge them because when setting up the funds to provide loans to customers, we expect them to keep the money for the time agreed at the outset. There is a cost to us if they repay some or the entire loan sooner. The charge compensates us for this cost.

    When do we charge them?

    A fee will be charged if the customer repays the loan while an early repayment charge is still present. Details of the charge percentage and end dates are detailed in the Mortgage Illustration and offer letter.

    If the customer repays part of the loan on which an early repayment charge applies, we’ll charge them a proportion of the early repayment charge due.

    We’ll also make an early repayment charge if we agree to transfer all or part of the loan to a new mortgage product during the early repayment charge period.

    Are there any exceptions to this?

    Yes. Currently with our fixed rate products, as a concession, each year the customer can make a single overpayment of up to 10% of the amount outstanding without having to pay an early repayment charge.

    If the amount you overpay exceeds 10%, or the customer makes any additional overpayments, we’ll only charge them an early repayment charge on the proportion they overpay above 10%, or as additional overpayments.

    With our variable rate products (excluding our Standard Variable Rate) there are no early repayment charges unless overpayments take the outstanding balance below £100, or pay off the mortgage completely. No early repayment charges apply in any circumstances to our Standard Variable Rate.

    Where the loan is divided into more than one part, the concession will apply to the amount owing on each part.

    Remember, we can change or withdraw our 10% early repayment charge concession, so if the customer decides they want to make regular or lump-sum overpayments, it’s always a good idea to contact us and check if the policy has changed. We will give at least three months’ notice before withdrawing or reducing the concession.

    If the customer is moving home and can take the product with the early repayment charge with them to a new mortgage, they may not have to pay the early repayment charge.

  • The list of acceptable reasons are as follows:

    • consumer goods
    • debt consolidation
    • gift to relative
    • home improvements
    • investment purpose (restriction - not for currency speculation or the purchase of stocks and shares)
    • purchase freehold - (conveyancer required)
    • purchase additional land adjacent to property (conveyancer required)
    • purchase extension to lease - (conveyancer required)
    • repay subsequent charge.
  • Lump sum or regular overpayments can be made at any time. If early repayment charges apply to the product, refer to early repayment charges for more details.

    You can’t make regular overpayments on a fixed rate product.

  • It is sometimes possible to take a product with you to a new mortgage. We call this ‘porting’. The Mortgage Illustration and offer letter will say if any products are portable.

    What does 'Porting' mean?

    Porting means taking a product to another mortgage with the same lender, so there’s no early repayment charge.

    The customer may be able to port the product and early repayment charge to the new mortgage for the amount they owe on the product they are porting. But if they are borrowing more, they’ll need to have a new product for the extra amount they borrow.

    If they are borrowing less than the amount they owe on the product they are porting, and the offer they have for their old mortgage says there is an early repayment charge, then they will have to pay an early repayment charge on the difference.

    When will the customer not be able to port?

    We’ll decide whether to offer a new mortgage based on our lending policies at the time the customer applies. If we don’t offer a new mortgage, the customer cannot port their product. Also, if the customer repays their existing mortgage, they will still have to pay early repayment charges.

    What if the customer can't repay their existing mortgage at the same time as they start my new mortgage?

    If the customer intends to sell their current property but can’t take out a new loan and repay the existing loan at the same time, they can ask permission to have two loans with us for a short time.

    We’ll agree to this if we think they can afford to pay the monthly payments on both loans. They may be able to take their existing product to the new loan. However, they will have to transfer the existing loan to the lender variable rate that applies to the existing loan until the sale is complete and they have fully repaid the loan.

    This is a concession that may not always be available.

    Other rules apply if the customer wants to let their existing property.

    What if the customer needs to repay their existing mortgage before they can start a new mortgage?

    If the customer sells their property but are not yet ready to buy another, they will need to repay the existing mortgage. This means they will have to pay any early repayment charges that apply. However, if they complete a new mortgage with us within 90 days of repaying the existing mortgage, they may be able to take their old product with them to the new mortgage. Once the new mortgage has started, they can apply to us for a refund of the early repayment charge.

    This is a concession that may not always be available.

  • The Product Transfer will take effect from the 1st of the month following the month in which the application and all required documentation are received.

  • If an existing mortgage is already FCA Regulated then it will stay FCA regulated regardless of a further advance or product transfer.

    If, however, a mortgage is non-FCA regulated and a further advance is required, to give the client the regulatory protection for the entire mortgage, the existing debt is refinanced to make the whole mortgage FCA Regulated.

    Please note that a standalone product transfer would not make the mortgage regulated.

  • If a SCG is present contact you if there is a problem with the SCG type or problems in obtaining a Letter of Postponement (LOP).

    If any of the following SCG reasons are present the further advance cannot proceed:

    • bankruptcy inhibition
    • bankruptcy order
    • creditors notice
    • drug trafficking offence
    • receiving order
    • sequestration.

    If the SCG is registered to a non-clearing bank and is to be repaid, a conveyancer must be instructed.

    If the client does not intend to repay the SCG using the further advance and will therefore continue after completion, The Bank will request a Letter of Postponement (LOP) from the SCG lending company. If the LOP is not granted the further advance cannot proceed. It is not unusual for the SCG lending company to refuse to grant an LOP.

Interest only

We offer mortgages on a full or partial interest only basis.

If the total borrowing is over 75% LTV the full balance must be on a repayment basis.

All interest only borrowing must be supported with an acceptable repayment plan, which we’ll need to see evidence of before a mortgage offer can be produced.

Acceptable repayment plans

Below are the repayment plans we currently accept. Click on each one to see associated criteria, evidence required, and the assessment method we’ll use.

This information is a guide. We’ll only issue a mortgage offer once we’ve confirmed the evidence supplied meets our criteria for the amount required.

  • Criteria: Evidence required: Assessment method:

    Sole applicants must have a minimum income of £100,000 pa. For joint applications, one of the applicants must have a minimum income of £100,000 pa, or the joint applicants must have a minimum combined income of £150,000 pa.

     

    The income requirement is calculated on the total of basic, overtime, bonus and commission for employed applicants, or the latest year’s income for self employed applicants.

     

    Maximum term of mortgage to state pension age or anticipated retirement age (no lending into retirement).

     

    Up to 50% LTV can be on interest only. Borrowing over 50% and up to 75% LTV must be on a repayment basis.

    No additional evidence is required. We’ll use the valuation carried out on application to calculate the equity available.

    There must be at least £400,000 equity in the property. We can use the full equity amount to support interest only lending.

     

    You must ensure your client understands the requirement to sell their property at the end of the term to repay the outstanding loan.

  • Criteria: Evidence required: Assessment method:

    Sole applicants must have a minimum income of £100,000 pa. For joint applications, one of the applicants must have a minimum income of £100,000 pa, or the joint applicants must have a minimum combined income of £150,000 pa.

     

    The income requirement is calculated on the total of basic, overtime, bonus and commission for employed applicants, or the latest year’s income for self employed applicants.

     

    Maximum term of mortgage is normally to state pension age or anticipated retirement age (no lending into retirement), although longer terms can be considered.

    No additional evidence is required. We’ll use the valuation carried out on application to calculate the equity available.

    No minimum equity requirement. We can use the full equity amount to support interest only lending.

     

    You must ensure your client understands the requirement to sell their property at the end of the term to repay the outstanding loan.

  • Criteria: Evidence required: Assessment method:

    Sole applicants must have a minimum income of £100,000 pa. For joint applications, one of the applicants must have a minimum income of £100,000 pa, or the joint applicants must have a minimum combined income of £150,000 pa.

     

    The income requirement is calculated on the total of basic, overtime, bonus and commission for employed applicants, or the latest year’s income for self employed applicants.

     

    Maximum term of mortgage to state pension age or anticipated retirement age (no lending into retirement). We’ll allow the term to run up to term plus 11 months past the lower of the two.

     

     

     

    If received monthly, the latest three payslips.

     

    If received quarterly, the latest four payslips showing bonus payments.

     

    If received half yearly the latest two payslips showing bonus payments.

     

    If received annually, the latest two years payslips showing bonus payments.

     

    An average value should be calculated and used.

     

    Payslips must show the applicant’s name, employer, pay date and gross bonus amount.

    An annual bonus figure is calculated from the payslips provided as evidence. Where bonus is paid annually, the average of the bonus received in the last two years is used. 30% of this bonus figure is then multiplied by the term of the mortgage required for the amount of interest only lending available.

     

    There’s an expectation that the applicant will make periodic lump sum repayments to reduce the amount outstanding during their interest only mortgage and it’s important they understand this. Early Repayment Charges would apply as normal where any overpayment concession is exceeded.

     

    Where any bonus is to be used as a repayment plan, no bonus income earned by any applicant to the mortgage will be used in our affordability assessment.

  • Criteria: Evidence required: Assessment method:

    Sole applicants must have a minimum income of £100,000 pa. For joint applications, one of the applicants must have a minimum income of £100,000 pa, or the joint applicants must have a minimum combined income of £150,000 pa.

     

    The income requirement is calculated on the total of basic, overtime, bonus and commission for employed applicants, or the latest year’s income for self employed applicants.

     

    Cash must be held in £ sterling.

     

    Maximum term of mortgage to state pension age or anticipated retirement age (no lending into retirement).

    Copy of statement dated within the last month, and a previous statement showing the cash amount being held for a minimum of three consecutive months.

     

    The cash could be held across more than one account.

    If a minimum of £50,000 has been held in savings or current account for a minimum of three consecutive months, 100% of the current cash balance can be used to support interest only lending. If statements show a fluctuating cash balance then the lowest balance will be used.

     

    If savings are also being used as source of deposit, evidence of an amount sufficient for both the repayment plan and deposit must be provided.

  • Criteria: Evidence required: Assessment method:

    Sole applicants must have a minimum income of £50,000 pa. For joint applications, one of the applicants must have a minimum income of £50,000 pa, or the joint applicants must have a minimum combined income of £50,000 pa.

     

    The income requirement is calculated on the total of basic, overtime, bonus and commission for employed applicants, or the latest year’s income for self employed applicants.

     

    Must be a UK pension.

     

    The term of any interest only lending must not exceed the lower of state pension age or anticipated retirement age. We’ll allow the term to run up to term plus 11 months past the lower of the two.

    Copy of latest pension statement dated within the last 12 months.

    The pension must have a minimum projected total fund value of £400,000, of which a maximum 15% of this amount will be used to support interest only lending. Where a projected total fund value does not show on the pension statement, such as on a final salary scheme, if the projected lump sum is at least £100,000 up to 60% of the projected lump sum value can be used. Where a statement gives a range of projected values the middle of three figures or the lower of two will be used.

     

    Pension contributions should be declared under the ‘Total monthly payment towards repayment plans’, and will be used in our affordability calculations. Your client must understand the need to maintain pension contributions.

  • Criteria: Evidence required: Assessment method:

    Sole applicants must have a minimum income of £50,000 pa. For joint applications, one of the applicants must have a minimum income of £50,000 pa, or the joint applicants must have a minimum combined income of £50,000 pa.

     

    The income requirement is calculated on the total of basic, overtime, bonus and commission for employed applicants, or the latest year’s income for self employed applicants.

     

    Must be a UK policy.

     

    Both with profits and unitised plans permitted.

    Copy of the latest projection statement dated within the last 12 months.

    Endowment companies will present three growth rates to a client with the middle projection being the most likely outcome.

     

    We allow up to 100% of the projected amount using the middle projection figure (usually at 6%).

  • Criteria: Evidence required: Assessment method:

    Sole applicants must have a minimum income of £50,000 pa. For joint applications, one of the applicants must have a minimum income of £50,000 pa, or the joint applicants must have a minimum combined income of £50,000 pa.

     

    The income requirement is calculated on the total of basic, overtime, bonus and commission for employed applicants, or the latest year’s income for self-employed applicants.

     

    Only UK based investments quoted within the FTSE index and held in sterling are acceptable.

    Copy of the latest statement dated within the last 12 months.

    We’ll compare the value of the asset with the amount of interest only lending required, taking into account the remaining term of the mortgage and future market volatility.

     

    The valuation we assign to the investment is 80% of the current value, which must be greater than £50,000*.

     

    *For existing customers the current value minimum threshold does not apply if the total amount of interest only borrowing is not being increased.

  • Criteria: Evidence required: Assessment method:

    Sole applicants must have a minimum income of £50,000 pa. For joint applications, one of the applicants must have a minimum income of £50,000 pa, or the joint applicants must have a minimum combined income of £50,000 pa.

     

    The income requirement is calculated on the total of basic, overtime, bonus and commission for employed applicants, or the latest year’s income for self employed applicants.

     

    Only shares quoted within the FTSE index and held in sterling are acceptable.

    Copy of share certificates, nominee account statement or confirmation from a recognised stock broker containing evidence of share holdings, together with their valuation. Must be dated within the last 12 months. As above for UK based Stocks & Shares ISAs, Unit Trusts, OEICs and Investment Bonds.
  • Criteria: Evidence required: Assessment method:

    Sole applicants must have a minimum income of £50,000 pa. For joint applications, one of the applicants must have a minimum income of £50,000 pa, or the joint applicants must have a minimum combined income of £50,000 pa.

     

    The income requirement is calculated on the total of basic, overtime, bonus and commission for employed applicants, or the latest year’s income for self-employed applicants.

     

    Due to valuation and verification requirements this is restricted to properties within the UK.

    Completed ‘Interest Only Other Residential Property’ form.

     

    If the mortgage lender is outside Lloyds Banking Group we need a copy of the latest mortgage statement dated within the last 12 months.

    We’ll check the ownership of the other residential property and assess its value. We’ll compare the equity available in the property with the amount of interest only lending required.

     

    Current equity within the property must be over £50,000. We’ll use 80% of the current equity available in the property to support interest only lending. Note there must be at least £50,000* equity available in each individual property being used to support interest only lending.

     

    *For existing customers the current value minimum threshold does not apply if the total amount of interest only borrowing is not being increased.

  • Criteria: Evidence required: Assessment method:

    Sole applicants must have a minimum income of £50,000 pa. For joint applications, one of the applicants must have a minimum income of £50,000 pa, or the joint applicants must have a minimum combined income of £50,000 pa.

     

    The income requirement is calculated on the total of basic, overtime, bonus and commission for employed applicants, or the latest year’s income for self employed applicants.

     

    Due to valuation and verification requirements this is restricted to properties within the UK.

    We’ll need property details, acting solicitor to confirm intended ownership of the second property and details of any loans to be secured against this property. We may carry out a property valuation and land registry search.

    We’ll confirm the intended ownership of the second property prior to producing a mortgage offer.

     

    Current equity within the property must be over £50,000. We’ll use 80% of the current equity available in the property to support interest only lending. Note there must be at least £50,000* equity available in each individual property being used to support interest only lending.

     

    *For existing customers the current value minimum threshold does not apply if the total amount of interest only borrowing is not being increased.

Further Advances

If your client has any of their existing debt on interest only they will need to provide evidence that they have a repayment plan in place to repay the capital at the end of the term.

If the Further Advance is to be conducted on an interest only basis, we will also require evidence of the repayment plan that your client intends to use to repay the Further Advance amount at the end of the term. This repayment plan must be from our acceptable list.

If the Further Advance is to be conducted on a capital and interest repayment basis and your client has an existing interest only debt, they must still provide evidence that they have a repayment plan in place to repay the interest only capital balance at the end of the term.

Only where the evidence to support the Further Advance, as well as any existing interest only debt, meets our criteria and covers the full amount to be conducted on an interest only basis, can the Further Advance Offer be produced.

Product transfers and contract changes

If your client has any of their existing debt on interest only they’ll need to provide evidence that they have a repayment plan in place to repay the capital at the end of the term.

A Product Transfer can only be completed once the repayment vehicle has been validated.

Exceptions which can be considered if customer does not meet lending rules

If an existing customer wants to amend their Scottish Widows Bank mortgage and they do not meet current lending rules, we may consider allowing provided the amount of their current Interest Only loan and term are not increasing. Please refer to your BDM for guidance.

Employment types

Acceptable income types

  • Verification document (preferred shown first alternative shown below) Criteria

    Latest three payslips (this applies whether the applicant is paid weekly or monthly).


    *Hand written payslips are not acceptable*

     

    Employer's reference.

    Must show applicant & employer name, pay date, basic income, gross & net pay and any additional payments being used in affordability.

     

    On occasions where the customer is unable to provide our preferred documentation, we are able to request an employer's reference to verify the income.

  • Verification document (preferred shown first alternative shown below) Criteria

    Benefit award letter.

     

    Latest full bank statement.

    Benefit award Letter.

     

    Must be dated within the last 12 months, show applicant name & monetary value of allowance.

     

    The benefit must not be received on behalf of another person, e.g. a dependant. 

     

    Latest full bank statement.

     

    Customer full name or initial & surname, account number, receipt of payment for DLA, bank heading/name & http address for internet statement.

  • Verification document (preferred shown first alternative shown below) Criteria

    Latest three payslips, (this applies whether the applicant is paid weekly or monthly).

     

    *Hand written payslips are not acceptable*

     

    Employer's reference.

    Must show applicant & employer name, pay date, basic income, gross & net pay and any additional payments being used in affordability.

     

    On occasions where the customer is unable to provide payslips that fit the listed criteria, we are able to request an employer's reference to verify the income.

  • Verification document (preferred shown first alternative shown below) Criteria

    Latest three payslips, (this applies whether the applicant is paid weekly or monthly).

     

    *Hand written payslips are not acceptable*

     

    Employer's reference.

    Must show applicant & employer name, pay date, basic income, gross & net pay and any additional payments being used in affordability.

     

    On occasions where the customer is unable to provide our preferred documentation, we are able to request an employer's reference to verify the income.

  • Verification document (preferred shown first alternative shown below) Criteria

    See Town, Area & Car Allowance

     
  • Verification document (preferred shown first alternative shown below) Criteria

    Benefit award letter.


    Latest full bank statement.

    Must be dated within the last 12 months, show applicant name & monetary value of allowance.

     
    The benefit must not be received on behalf of another person, e.g. a dependant. 


    Customer full name or initial & surname, account number, receipt of payment for DLA, bank heading/name & http address for internet statement.

  • Verification document (preferred shown first alternative shown below) Criteria

    Latest bank statement.


    Latest benefit award letter (dated within the last 12 months).

    Customer full name or initial and surname, account number, receipt of payment for child benefit, bank heading/name and http address for internet statement.

     
    Must show applicants name and address and relate to current tax year.

  • Verification document (preferred shown first alternative shown below) Criteria

    Latest award letter from HMRC (all pages).


    Latest full month bank statement.

    Must show applicants name & address and relate to current tax year.

     

    Income declared to Inland Revenue for calculating the awarded amount must match the income keyed on the application otherwise the letter is unacceptable. 


    If the letter is in joint names, the income can be keyed for either applicant but both must be party to the mortgage. 


    Customer full name or initial & surname, account number, receipt of payment for CTC/WTC, bank heading/name & http address for internet statement.

  • Verification document (preferred shown first alternative shown below) Criteria

    Latest three months payslips/invoices and corresponding bank statements.


    Employers reference.

    Payslip/invoice must show applicant & employer name, pay date, basic income, gross & net pay bank statement must show customer full name or initial & surname, account number, salary amount credited, employer name & bank heading/name & http address for internet statement.

     
    On occasions where the customer is unable to provide our preferred documentation fitting the listed criteria, we are able to request an employer's reference to verify the income.

  • Verification document (preferred shown first alternative shown below) Criteria

    See self-employed income verification.

     
  • Verification document (preferred shown first alternative shown below) Criteria

    Benefit Award letter.


    Latest full bank statement.

    Must be dated within the last 12 months, show applicant name & monetary value of allowance.

     
    The benefit must not be received on behalf of another person, e.g. a dependant. 


    Customer full name or initial & surname, account number, receipt of payment for benefit, bank heading/name & http address for internet statement.

  • Verification document (preferred shown first alternative shown below) Criteria

    Copy of the contract.

    All applicants must have a current continuous employment of 12 months or more with 6 months of the contract remaining or two years continuous service (for the last two years as at the date of application) in the same type of employment.

  • (Mobility Payments can only be included if part of any other disablement benefits.)

    Verification document (preferred shown first alternative shown below) Criteria

    DLA Award letter.

     

    Latest full bank statement.

    Must be dated within the last 12 months, show applicant name & monetary value of allowance DLA must not be received on behalf of another person, e.g. a dependant.

     

    Customer full name or initial & surname, account number, receipt of payment for DLA, bank heading/name & http address for internet statement. 

  • Applicants will be treated as employed/self-employed accordingly.

    Verification document (preferred shown first alternative shown below) Criteria

    Latest payslip & corresponding bank statement.

     

    Latest Tax Calculations accompanied by corresponding Tax Year Overviews. 

    Must show applicant & employer name, pay date, basic income, gross & net pay and any additional payments being used in affordability.

     

    The year the Tax Calculation related to and customer’s name/initial & surname must be shown. Tax Calculations can be obtained from the customer’s online self-assessment account. The following details must be visible on the online Tax Calculation:

    • HMRC logo
    • Unique Tax Reference (UTR)
    • customer’s name
    • tax year (most recent no older than 18 months old), and the following wording:
      • “This is a copy of information held on your official online SA tax account with HMRC”, and
      • “Submission is 100% complete.”

     

    Online tax assessments produced by accountants’ commercial software (accompanied by corresponding Tax Year Overviews) are acceptable provided they show the following:

    • Unique Tax Reference number
    • customer’s name.
    • tax year (most recent no older than 18 months old).
  • Applicants will be treated as employed/self-employed accordingly.

    Verification document (preferred shown first alternative shown below) Criteria

    Last three years Tax Calculations accompanied by corresponding Tax Year Overviews.

     

    Full Accounts.

    The year the Tax Calculation related to and customer’s name/initial & surname must be shown. Tax Calculations can be obtained from the customer’s online self-assessment account. The following details must be visible on the online Tax Calculation:

    • HMRC logo
    • Unique Tax Reference (UTR)
    • customer’s name
    • tax year (most recent no older than 18 months old), and the following wording:
      • “This is a copy of information held on your official online SA tax account with HMRC”, and
      • “Submission is 100% complete.”

     

    Online tax assessments produced by accountants’ commercial software (accompanied by corresponding Tax Year Overviews) are acceptable provided they show the following:

    • Unique Tax Reference number
    • customer’s name.
    • tax year (most recent no older than 18 months old).

     

    Must be finalised, and clearly show the net profit (for sole traders), share of net profit (for partnerships) or salary & dividends (for director of Limited company). Profit & Loss statements alone are NOT acceptable.

  • Verification document (preferred shown first alternative shown below) Criteria

    Benefit award letter.

     

    Latest full bank statement.

    Must be dated within the last 12 months, show applicant name & monetary value of allowance. The benefit must not be received on behalf of another person, e.g. a dependant.

     

    Customer full name or initial & surname, account number, receipt of payment for benefit, bank heading/name & http address for internet statement.

  • Applicants should be key as self-employed. See self-employed income verification.

    Verification document (preferred shown first alternative shown below) Criteria

    See self-employed income verification.

     
  • Verification document (preferred shown first alternative shown below) Criteria

    Latest payslip, (this applies whether the applicant is paid weekly or monthly).

     

    Employer's reference.

    Must show applicant & employer name, pay date, basic income, gross & net pay and any additional payments being used in affordability.

     

    On occasions where the customer is unable to provide payslips that fit the listed criteria, we are able to request an employer's reference to verify the income.

  • Verification document (preferred shown first alternative shown below) Criteria

    Same as evidencing Basic Income.

     
  • Verification document (preferred shown first alternative shown below) Criteria

    Latest payslip Employer's reference.

    Key as Private Pension. The term must not extend past the final payment date for GIP if affordability is based on this income only

  • Verification document (preferred shown first alternative shown below) Criteria

    Latest payslip, (this applies whether the applicant is paid weekly or monthly).

     

    Employer's Reference.

    Must show applicant & employer name, pay date, basic income, gross & net pay and any additional payments being used in affordability.

     

    On occasions where the customer is unable to provide payslips that fit the listed criteria, we are able to request an employer's reference to verify the income.

  • Verification document (preferred shown first alternative shown below) Criteria

    Benefit Award Letter.

     

    Latest full bank statement.

    Must be dated within the last 12 months, show applicant name & monetary value of allowance. The benefit must not be received on behalf of another person, e.g. a dependant.

     

    Customer full name or initial & surname, account number, receipt of payment for benefit, bank heading/name & http address for internet statement.

  • Verification document (preferred shown first alternative shown below) Criteria

    Copy of the IT Contract.

     

    Employer's Reference.

    All applicants must have a current continuous employment of 12 months or more with 6 months of the contract remaining or two years continuous service (for the last two years as at the date of application) in the same type of employment.

     

    On occasions where the customer is unable to provide our preferred documentation, we are able to request an employer's reference to verify the income.

  • Verification document (preferred shown first alternative shown below) Criteria

    Bank statements (latest three consecutive full months).

     

    Court Order (minute agreements for maintenance income are not required to be sealed) Maintenance Assessment Letter from Child Support Agency (CSA).

    Customer full name or initial & surname, account number, receipt of payment, bank heading/name & http address for internet statement.

     

    Must show applicant name & monetary value.

  • Verification document (preferred shown first alternative shown below) Criteria

    Latest payslip received prior to commencement of maternity leave or latest payslip where annual salary is clearly displayed.

     

    Employer's Reference.

    Must show applicant & employer name, pay date, basic income, gross & net pay and any additional payments being used in affordability.

     

    On occasions where the customer is unable to provide our preferred documentation, we are able to request an employer’s reference to verify the income.

  • Verification document (preferred shown first alternative shown below) Criteria

    If the new income amount is not already shown on the latest payslip, the applicant's contract or letter confirming employment will be used.

    Payslip must show applicant & employer name, pay date, basic income, gross & net pay and any additional payments being used in affordability.

  • Verification document (preferred shown first alternative shown below) Criteria

    Latest three payslips, (this applies whether the applicant is paid weekly or monthly.

     

    *Hand written payslips are not acceptable*

     

    Employer's Reference.

    Must show applicant & employer name, pay date, basic income, gross & net pay and any additional payments being used in affordability.

     

    On occasions where the customer is unable to provide our preferred documentation, we are able to request an employer's reference to verify the income.

  • Verification document (preferred shown first alternative shown below) Criteria

    If received weekly or monthly, then latest three payslips. 

     

    Yearly/Half Yearly/Quarterly – the total payments for the last 12 months is used for the bonus which must be shown on all the relevant payslip(s).

     

    Employer's Reference.

    Must show applicant & employer name, pay date, basic income, gross & net pay and any additional payments being used in affordability.

     

    On occasions where the customer is unable to provide payslips that fit the listed criteria, we are able to request an employer's reference to verify the income.

  • Verification document (preferred shown first alternative shown below) Criteria

    Latest full Bank Statement.

    Customer full name or initial & surname, account number, receipt of payment for pension, bank heading/name & http address for internet statement.

  • Verification document (preferred shown first alternative shown below) Criteria

    Latest payslip, pension statement or P60 (dated within 12 months).

    P60 - must be dated within the last 12 months, show applicant name, company name & income amount. On occasions where the customer is unable to provide our preferred documentation fitting the listed criteria, we are able to request an employer's reference.

  • Verification document (preferred shown first alternative shown below) Criteria

    Latest bank statement.

     

    Latest Benefit Award Letter (dated within the last 12 months).

    Key as Private Pension. The term must not extend past the final payment date for PHI if affordability is based on this income only.

  • Verification document (preferred shown first alternative shown below) Criteria

    Any one of the following can be used to evidence rental income:

    • three months consecutive bank statements
    • tenancy agreement (current)
    • letter from letting agent; OR
    • letter from accountant or solicitor.

    (When a tenancy agreement expires it is normal to have an automatic renewal for the same rent period without a new agreement being issued. In this case, as the tenancy agreement will not be within date, rental income should be evidenced via one of the other methods as shown above.)

    Customer full name or initial & surname, account number, receipt of rental income, bank heading/name & http address for internet statement must show applicants name, rental period & rental payment must be on company headed paper, addressed to applicant & confirm property address, rental payment & that the property is currently rented.

  • Verification document (preferred shown first alternative shown below) Criteria

    Any one of the following can be used to evidence rental income:

    • three months consecutive bank statements
    • tenancy agreement (current)
    • letter from letting agent; OR
    • letter from accountant or solicitor.

    (When a tenancy agreement expires it is normal to have an automatic renewal for the same rent period without a new agreement being issued. In this case, as the tenancy agreement will not be within date, rental income should be evidenced via one of the other methods as shown above.)

    Customer full name or initial & surname, account number, receipt of rental income, bank heading/name & http address for internet statement must show applicants name, rental period & rental payment must be on company headed paper, addressed to applicant & confirm property address, rental payment & that the property is currently rented.

  • Verification document (preferred shown first alternative shown below) Criteria

    Pensions Statement.

    Must show applicant & employer name, pay date, basic income, gross & net pay.

  • Verification document (preferred shown first alternative shown below) Criteria

    Latest three consecutive payslips, (this applies whether the applicant is paid weekly or monthly.

     

    *Hand written payslips are not acceptable*

     

    Employer's Reference

    Must show applicant & employer name, pay date, basic income, gross & net pay and any additional payments being used in affordability.

     

    On occasions where the customer is unable to provide a payslip that fits the listed criteria, we are able to request an employer's reference to verify the income.

  • Verification document (preferred shown first alternative shown below) Criteria

    Letter of Confirmation from Religious Order - e.g. ‘Statement of Particulars’ for Church of England same as evidencing Basic Income.

    Must show applicant & employers name, pay date and basic income.

  • Verification document (preferred shown first alternative shown below) Criteria

     Latest payslip.

    The applicant must have had current continuous employment of 12 months or more and at least six months remaining; or at least two years continuous service, for the last two years (as at the date of application) in the same type of employment.

  • Verification document (preferred shown first alternative shown below) Criteria

    Latest full Bank statement.

     

    Latest payment confirmation letter (must be dated within 12 months).

    Key as Pension-State.

  • Verification document (preferred shown first alternative shown below) Criteria

    Latest payslip, (this applies whether the applicant is paid weekly or monthly).

     

    *Hand written payslips are not acceptable*

     

    Employer's Reference.

    Must show applicant & employer name, pay date, basic income, gross & net pay and any additional payments being used in affordability.

     

    On occasions where the customer is unable to provide a payslip that fits the listed criteria, we are able to request an employer's reference to verify the income.

Unacceptable income types

  • Bereavement allowance
  • Bursary
  • Council Tax benefit
  • DWP or Income Support
  • Expenses
  • Foster Care allowance
  • Piecework contract
  • Seasonal contract
  • Temporary contract

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