Mortgage Policy Information
Income Multiples Matrix
Income Multiples for Residential Products
|
Gross Basic Income Band |
High Credit Score | Medium Credit Score | Low Credit Score | |||
|---|---|---|---|---|---|---|
| Single Income | Joint Income | Single Income | Joint Income | Single Income | Joint Income | |
| Over £32,500 | 4.5 | 4.2 | 4.2 | 4.0 | 3.6 | 3.0 |
| £17,501 - £32,500 | 4.0 | 3.7 | 3.8 | 3.5 | 3.4 | 2.8 |
| £0 - £17,500 | 3.5 | 3.2 | 3.3 | 2.8 | 2.9 | 2.1 |
The table above sets out the income multiples that will apply, subject to credit score, for all residential products.
Please note that it is only the applicants gross basic income that will determine which income multiple their application will receive. However, all acceptable income (i.e including 50% of bonuses and overtime) will be used in the multiplier. Therefore a single applicant with a High Credit Score, and £30,000 gross basic income, but £5,000 of acceptable additional income can receive 4.0 x £35,000 = £140,000.
Joint customers can combine their income and use the joint multiple. For example, two Medium Credit Score borrowers submitting a joint application, with total gross basic income of £120,000 could obtain 4.00x £120,000 = 480,000. However, joint applicants also have the option of taking the single income multiple x the higher income, and adding 1 x the lower income. For example, joint applicants with a Medium Credit Score earning £110,000 and £10,000 respectively, could take £110,000 x 4.2 plus 1 x £10,000 = £472,000.
Please always consider us for cases outside standard policy - we will be happy to advise what we would be prepared to offer your clients.
Multiple applicants will be considered on application.
Additional Case Information
This table provides details of the documents we will require to verify income. Please ensure that all paperwork, including fees, are in order and forms are signed and dated before submission. This will help us to process the application quickly.
| Additional Case Information | ||
|---|---|---|
| Customer Credit Score | Customers with an LTV up to and including 70% |
Customers with an LTV greater than 70% (including all applications for First Time Buyers and where the property is worth less than £100,000) |
| High Credit Score |
Fast Track Guarantee for eligible customers (see below for further details) Confirmation of identity and affordability is required - you must complete the confirmation of identity and affordability sections of the application form (for online and paper applications) and tick the relevant boxes on submission of a full application through the Northern Rock Online system |
Employed: last monthly payslip or two weeks payslips. Self Employed: accountant certificate, last 2 years accounts or last 2 years tax assessments. |
| Medium Credit Score | Employed: 2 of the last six monthly payslips plus last P60. If paid weekly, 4 of the last 8 weeks payslips plus last P60. Self Employed: Accountant certificate or last 2 years accounts or last 2 years tax assessments. |
|
| Low Credit Score |
Employed: Three of the last six months payslips plus last P60. If paid weekly four of the last eight weeks plus last P60. Self Employed: Accountant certificate or last three years tax assessments. In addition, last mortgage statement or lender reference. |
|
The Additional Case Information required for Low Credit Scores will also be required for all First Time Buyers. Customers with low credit scores are no longer eligible for Fast Track Guarantee applications
For loans over £500,000, a high credit score will be required.
For customers employed for less than 6 months, an employer’s reference will be required.
Please note that we will require full verification of income as detailed in the table above for all First Time Buyer applications, and any loan where the property is worth less than £100,000
Northern Rock reserves the right to seek additional information where we believe the lending risk requires further investigation. Northern Rock reserves the right to carry out occupation and income reasonability checks on any case at application stage. Following completion, Northern Rock will, from time to time, seek retrospective confirmation of income for loan performance monitoring purposes. This is in accordance with FSA Best Practice guidelines. These application and post completion checks will involve contacting employers in some instances.
It is an offence to knowingly make a false, inaccurate or misleading declaration when applying for a mortgage. If you make such a declaration you may face criminal prosecution and/or civil action for recovery of losses incurred by Northern Rock.
Fast Track Guarantee
Residential
All residential ‘next time buyer’ and remortgage applications will now be eligible for our Fast Track Guarantee – whereby we will not request an additional documentation to verify your clients’ income following submission of their application, providing the case meets the following criteria at Decision in Principle stage:
- The application is for a Residential Flexible Fixed product
- The application is for an LTV up to and including 70%
- The application is accepted.
- The property being remortgaged or purchased is worth at least £100,000
Once submitted, to continue down the Fast Track route, the application must meet the following criteria:
- The case must satisfy all other aspects of our lending criteria
- You must confirm the clients' identity and affordability of the loan by providing the relevant information as detailed in the table above
- No applicant or case details have been materially changed between Decision in Principle and Full Application submission
Please also note, we will carry out reasonability checks upon applications submitted under the Fast Track Guarantee. We reserve the right to contact intermediaries to confirm that any submitted details are correct.
The Fast Track Guarantee is not available for First Time Buyers, ‘Next Time Buyers’ and remortgage customers borrowing over 70% LTV.
Maximum Loan To Value
| Valuation or purchase price whichever is lower | Maximum Home Purchase/Re-mortgage |
|---|---|
| £0 - £500k | 90% |
| £501k+ | 80% |
The maximum Loan for Right-to-Buy, Sitting Tenants and Remortgages is based on valuation.
The maximum LTV for Buy To Let loans is 70%
There is a maximum loan size of £1m.
Property
If, for any reason, the application does not proceed on the original property the applicants must reapply for a new product available at that time.
The property offered as security must be in England, Scotland, Wales or Northern Ireland, residential, owner occupied and of traditional construction. Leasehold properties must have an unexpired term of at least 30 years at the end of the mortgage term.
Northern Rock requires a first legal charge over the property offered as security.
Valuation Fees
| Purchase Price | Valuation Report Fee | Homebuyer's Fee |
|---|---|---|
| up to £60,000 | £360 | £515 |
| £60,001 - £100,000 | £380 | £555 |
| £100,001 - £150,000 | £410 | £595 |
| £150,001 - £200,000 | £435 | £640 |
| £200,001 - £250,000 | £460 | £685 |
| £250,001 - £500,000 | £520 | £750 |
| £500,001 - £750,000 | £575 | £800 |
| £750,001 - £1,000,000 | £620 | £850 |
| £1,000,001 - £1,500,000 | £750 | £1,050 |
| £1,500,001 - £2,000,000 | £900 | £1,250 |
| £2,000,001 - £2,500,000 | £1,050 | £1,450 |
| £2,500,001 - £3,000,000 | £1,200 | £1,750 |
| Over £3,000,000 | By Negotiation | By Negotiation |
| (Fees shown include VAT.) | ||
A valuation cannot be instructed until the fee is paid. For loans where the advance exceeds £1 million, an additional desktop valuation will need to be carried out for a fee of £75. The above fees include an application fee of £250. This fee will be charged on all applications, where the free vauations and free legal fee incentive does not apply.
Applicant
A credit check will be made on all applicants and the loan will be declined where an adverse credit history is revealed, for example if a County Court Judgement is registered. In addition, statistical techniques (credit scoring) will be used as part of the decision making process.
Monthly mortgage payments must be made by Direct Debit otherwise an annual charge of £25 will be made to the mortgage account. The applicant will be responsible for all legal and valuation fees, whether or not the loan completes.
New Build Policy
Please note the maximum LTV available for New Build properties on any product (both Buy to Let and Residential) is as follows and is based on the lower of valuation or purchase price:
- New Build flats - maximum 70% LTV
New Build houses - Valuation/purchase price up to and including £500,000 maximum LTV 90% - Valuation/purchase price over £500,000 - maximum LTV 80%
Any incentives offered by the housebuilder will be deducted from the purchase price before the maximum LTV limit is applied.
The product fee can be added to the loan, and is allowed to take the maximum LTV above that which is determined by Northern Rock’s lending policy.
Purchases by way of sub-sale agreement are not usually acceptable. Refer to Northern Rock if further guidance is required.
Please note we will no longer accept builder's incentives of up to 5% of purchase price.
Existing Customers
At this present time there are no new products available to existing Northern Rock customers. All existing customers will be able to continue on their current product and will revert to the Standard Variable Rate, or guarantee rate, at the end of their deal, as per their terms and conditions.
The mortgage products available to new customers will not be available to existing Northern Rock customers.
To obtain a redemption statement for your client please contact us on 0845 604 4898 or 0191 522 3989. Lines are open Monday to Friday 8.30 am -7.00pm and Saturday 9.00am – 1.00pm. Calls are charged at your service providers prevailing rate and may be monitored and recorded.
Alternatively, get in touch with your local Business Development Manager.
Buy To Let Criteria
- Available for interest only and capital and interest loans.
- Available for individuals only.
- Minimum Property Valuation £40,000. Maximum total exposure £3 million.
- Maximum number of properties 10.
- The borrower must receive at least 120% of the monthly mortgage payment in rent. This is calculated as if on an interest only basis, at the pay rate of the selected product.
- Tenancy Agreements – Borrower must have (or be going to arrange as soon as they have tenants) an Assured Shorthold Tenancy Agreement.
- Property Exclusions - Any property not recommended as suitable security by our panel or underwriters. For Buy to Let mortgages we will only lend on up to 20% of any development - for example, block of flats or a housing estate. Further restrictions may apply to larger developments.
- Maximum Number of Applicants 4. Minimum Age 21 for main applicant, minimum age of 18 years for additional applicants.
- The product fees will apply per property.
- Buy to Let mortgages are available on a 7 to 25 year loan term.
- The maximum LTV available for New Build flats on any Buy to Let product is 70%.
Additional case information - buy to let
- No proof of income is required for Buy To Let applications.
- Buy To Let loans are available to individuals only. They are not available to limited companies, please contact our Commercial Finance Department if the Buy To Let proposal is for a limited company.
- Joint applications of up to 4 applicants are acceptable.
- Applicants must be at least 21 years old, where there is more than one applicant, the main applicant must be 21 or over, the additional applicants must be at least 18 years old.
- We require information on the Landlords Buy to Let properties that are not mortgaged with Northern Rock if the total proposed Buy to Let borrowings with Northern Rock are in excess of £1 million. This can include, but is not limited to, details of property values, current rental income, and outstanding mortgage commitments.
- For proposals where total Buy to Let borrowings with Northern Rock are in excess of £500,000. A medium credit score is required. Additional underwriter discretion will be used for exposure over £1.5million.
Direct Debit
All loans must be repaid by Direct Debit or be subject to an annual charge (currently £25). If applicable, the first charge will be debited to the mortgage account on completion of the loan and subsequently on the anniversary of completion.
This charge will also apply where a Direct Debit is subsequently cancelled and replaced with another payment method.
Interest Only Loans
Full details of how the applicant intends to repay the mortgage must be given on the application form. Where this information is not provided or is insufficient, we will be unable to process the application until we receive satisfactory evidence and, as such the application will be delayed.
Lending Into Retirement
Where an applicant (either in case of joint applicants) is age 50 or over and who requires a loan term which extends beyond state retirement age we may need to see documentary evidence of post retirement income. Where the customer is within 5 years of state retirement age this is a mandatory requirement.