National Counties Building Society - updated lending criteria

05 March 2014

We have recently updated our published lending criteria to expand the detail included in some areas as well as to provide clearer information particularly in respect of the purpose of the borrowing, capital raising and interest only mortgages. Below is an extract of the areas of these new criteria (in blue) which may result in changes to your systems. I’d be grateful if you could check these details against your systems and amend where necessary.

Purpose of borrowing

Purchase of property
- Replacement of existing secured loans
- Additional borrowing (can be considered)

For remortgage applications, details of the purpose of the remortgage and the use of any additional funds being raised must be provided.

Remortgage applications will be considered for:

Purchase of residential property
(including the provision of a deposit for family members to purchase property)
Purchase of land
Purchase of buy to let property
Repayment of existing loans originally used to purchase land or property, or for property improvements
Transfer of Equity
Business loans
Alteration, extension, repair or improvement to the mortgaged property
Purchase of business premises
Other business purposes
Car purchase

Remortgage applications will not be considered for:

Repayment of tax or gambling debts
Repayment of an existing ‘lifetime’ mortgage facility
Borrowers who have impaired credit
Borrowers who have utilised ‘payday’ lenders
Borrowers seeking to consolidate over five credit cards
Borrowers seeking to consolidate debts accumulated with sub-prime or non-mainstream mortgage lenders or non-mainstream credit card providers
Borrowers seeking to raise capital for debt consolidation for more than 20% of the property value, or where the main purpose of the loan is debt consolidation (i.e. where more than 49% of the monies being raised are to consolidate existing debts).

A complete breakdown of the use of additional funds must be provided, to the total value of the advance requested. All cases, irrespective of loan purpose, will be required to pass the Society’s income and affordability requirements.

Interest-only mortgages

All or part of the loan may be on an interest-only basis. Details of the repayment strategy or savings plan must be provided along with evidence confirming the value of any repayment strategy. Types of repayment vehicles accepted include:

Sale of other assets, e.g. second home*, property, land, etc;
Pension cash lump sum (personal or occupational);
Stocks & shares ISA (new or existing);
Unit trust (new or existing);
Investment bond (new or existing);
Endowment policy (new or existing);
Stocks and shares;
Sale of mortgaged property, where this is a credible strategy because of downsizing and where it is deemed that the sale will provide sufficient funds to both repay the advance and allow the borrower to purchase a cheaper property to reside in.*

As a general rule, the following repayment strategies will not be acceptable:

Periodic repayment of capital from irregular sources of income, e.g. bonuses, self employed income;
Sale of mortgaged property outright;
An expectation that the mortgage property will increase in value over time.
The expectation of an uncertain inheritance
Conversion to repayment in the future;
Cash ISA;
Overpayment from income;
A repayment strategy including anyone who is not a party to the mortgage;
Sale of a business unless the business has tangible assets (such as property) that can be sold;
Sale of an overseas investment property.

If you have any questions on any of these please let me know. Full details of our lending criteria can be found on your website www.ncbs.co.uk. If there is any systems verification required following any changes made please let me know.

Thanks in advance

Kind regards,

Emma Avery^{CeMAP, CeRGI}

Product Development Officer
National Counties Building Society
Ebbisham House
30 Church Street
Epsom
Surrey
KT17 4NL

t: 01372 845 429
f: 01372 745 607
e: averye@ncbs.co.uk
w: www.ncbs.co.uk