Buy to Let Lending Policy

• Assessment of rental cover will be made on an interest only basis; the basis upon which the loan is agreed. The rental calculation used will depend on whether a short term or long term fixed product is selected:
  

  Tax Bands	Rental Calculation
  Lower rate tax payer	Fixed for less than 5 years: 125% at 8.50% Fixed for more than 5 years: 125% at 6.25% The above are all based on an Interest Only basis.
  Higher rate tax payer	Fixed for less than 5 years: 145% at 8.50% Fixed for more than 5 years: 145% at 6.25% The above are all based on an Interest Only basis.

• Our affordability assessment takes into account costs where the borrower is responsible for payment and also mortgage interest tax relief changes that commenced from April 2017.
• Any buy to lets held with other mortgage providers must have a rental coverage of 145% of the pay rate.
• We will not accept any surplus rental income from other buy to let properties held by the applicant(s) to make up any shortfall on the rental cover calculation. Equally, we will not consider income from the applicant(s) employment or self employment etc.
• The expected rental income for utilisation in the assessment must be independently confirmed by a valuer featuring on the Newcastle Building Society panel. We will use this figure for our affordability calculation. We may consider using the current rental income received where the loan is a remortgage on an existing property that is let.
• At least one applicant must have earned income.
• In some cases, we can consider income derived from a self invested personal pension. In these scenarios, please initially refer to your BDM.

• Minimum age of applicants is 21 years (no maximum at the end of the term).
• Maximum number of applicants is 2.
• NBS will only lend to individuals or joint borrowers who are UK residents where loans will be held in individual names. Applications from limited companies, Trusts and SPV's will not be accepted.
• Applications will not be accepted where any element of the property or land is to be used by the borrower or a connected person (e.g. spouse, partner, child, parent, grandparent etc). This is classed as regulated buy to let which we do not lend on.
• We will accept applications that are classified as Consumer Buy to Let (CBTL) - see section below
• Applications from first time buyers will not be accepted. Applicants must currently own a residential property which is their main residence or have another BTL mortgage already in existence. For clarification, for joint applications, one of the applicant needs to be a next time buyer.
• All applicants will be credit searched on receipt of new application and will require at least 3 years UK address history. There will be no exceptions to this.
• Existing borrowers can take new loans subject to meeting all Policy criteria for BTL lending. All new loans will be underwritten to same standards as a new borrower and new terms and conditions will apply to both the new and any existing loans.

• The Mortgage Credit Directive has introduced a new form of lending known as Consumer Buy to Let. Applicants who fall into this category will receive additional complaint and compensation protection than normal buy to let investors.
• We define a Consumer Buy to Let (CBTL) mortgage as where:
  • The loan type is remortgage AND
  • The applicant is a first time Buy to Let landlord AND
  • The applicant or a close family relative have ever resided in the property
• Intermediaries must have registered with the FCA to be able to advise and recommend on Consumer Buy to Let business. This must be confirmed by the intermediary when submitting the application.
• Where the loan is identified as Business Buy to Let we require the applicant to sign a declaration to confirm that the loan is for business purposes and that they acknowledge that they will not receive the same level of consumer protection as a regulated loan.

• As part of our overall assessment, the Society will credit score all Buy to Let mortgage applications to assess the credit worthiness of applicants. Applicants will be credit scored at Decision in Principle stage and this will leave a soft footprint on their credit file. Please note, this will leave a hard footprint if the case proceeds to a full mortgage application.
• The credit score will either decline or refer applications to underwriters for an individual assessment

• You can register and submit a BTL DIP via our Intermediary website www.newcastleis.co.uk.
• By registering online, you will set up your unique login details and, once approved, join our panel of advisers. We will aim to review your registration within two working hours of you applying (Monday to Friday 8am to 6pm).
• Once you have been accepted, you will be able to log in and get a decision in principle, confirming whether a client has been approved for a mortgage with us, as well as manage DIP cases you have submitted online.
• On acceptance of the DIP, you can now progress to full application and also submit supporting documentation via our document upload facility.

• Applications will be accepted for both purchase and remortgage.
• Minimum Loan £25,000 (please however refer to specific product details)
• Minimum Property Value £75,000
• Maximum LTV is 80%
• Minimum Term is 5 years/Maximum Term is 25 years.
• Maximum loan on an individual property is £1,000,000.
• On a purchase application the deposit should come from the applicants own sources. (Documentary evidence may be obtained at the underwriter's discretion). It is acceptable for the deposit to come from:
• remortgaging another of the applicant's buy to let properties
• remortgaging their existing residential property
• a family gift (download a copy of our gifted deposit form)
• Where remortgage; the property must have been owned by the applicant for at least 6 months
• LTV limits apply to both individual applications and on an aggregate basis regarding BTL portfolios mortgaged with the Society.

Loan Amount	Maximum Loan to Value
Up to £500,000	80%
£500,001 to £750,000	75%
£750,001 to £1,000,000	70%

• Maximum aggregate exposure to Newcastle Building Society of £3,000,000 includes any residential mortgage that the borrower may have with the Society.
• Maximum number of properties to be mortgaged with the Society is 3. This applies to each investor.
• Maximum number of mortgaged Buy to Let properties over-all is 3. This applies to each investor.
  
  For the avoidance of doubt;
  • Buy to Let properties mortgaged to NBS would count towards the 3;
  • Buy to Let properties that are tenanted but unencumbered would not count towards the 3

• Loans can be arranged on both repayment and interest only - or a combination of both. Where an interest only element is requested, details are required of the repayment strategy to repay the loan at the end of the mortgage term. Sale of security property or other BTL properties will be considered as an acceptable means of repayment in this regard.
• Further advances will be considered subject to product limits and maximum LTV exposure
• Capital Raising will only be considered where the funds are not to be used for debt consolidation of any unsecured lending / credit card / existing buy to let mortgages etc. Maximum LTV remains 80%. Underwriters retain discretion to request further information / proof of how funds will be used.

• Income & Employment verification is required in line with standard Residential Lending Policy, however business bank statements are not required for Self Employed applicants. Please see Affordability section for income requirements.

• Applicants must provide evidence that all current residential and BTL mortgages are performing satisfactorily. This will be initially checked by the credit search carried out at Decision in Principle stage, but may also require evidence from most recent annual mortgage statement or bank statements to demonstrate satisfactory payment over the last 12 months at our discretion.
• All applicants will be expected to disclose the full extent of their BTL portfolio both at DIP and full application. This will include information on:
  
  • Address of the property
  • Date of purchase
  • Original purchase price
  • Tenancy type
  • Current monthly rent
  • Estimated value of property
  • Current mortgage balance outstanding
  • Current mortgage payment
  • Details of lender and reference number

These details will be verified against Land Registry information, credit report and external checks on the plausibility of rental income.

• For all applicants (new and existing) the following must apply for an application to be accepted:-
  • No County Court Judgements registered within last 3 years irrespective of being satisfied
  • No County Court Judgements that have been registered in last 6 years that remain outstanding or only satisfied within last 3 years
  • No registered secured or unsecured credit defaults within last 3 years irrespective of being satisfied
  • No current secured arrears or recent history of non payment
  • No Debt Relief Order (DRO), IVA's or Bankruptcy that have only been satisfied within the last 3 years
  • No previous repossessions
  • We will not lend on cases where there is active debt management and any debt management programme must be settled for at least 12 months, with satisfactory credit record demonstrated since that time
• Our underwriters may be willing to accept a maximum of 2 satisfied defaults/CCJs below £250 from utility companies, communications or mail order with satisfactory explanation within the last 3 years. This is still subject to the whole case being good quality.

The Society can accept the following POA documents -

• ORDINARY POWER OF ATTORNEY (also known as General or Limited Power of Attorney) (OPA)
• ENDURING POWER OF ATTORNEY (EPA)
• LASTING POWER OF ATTORNEY (LPA) for Property and Financial Affairs
• COURT OF PROTECTION ORDERS (COP)
• CONTINUING POWER OF ATTORNEY - This is the Scottish equivalent to the Lasting Power of Attorney for Property and Financial Affairs.

We can also accept the Government access code beginning with V to view electronic LPAs.

The document must be valid and complete and it must contain specific provisions granting the attorney the power to borrow mortgage funds on behalf of the donor. Please note that although the types of POAs noted above and some COPs grant the power to buy and sell property, this does not include the power to borrow mortgage funds as standard, so that particular power will need to be specifically noted in the document.

When submitting a mortgage application with any of the above attached, the Registration of Power of Attorney (Court of Protection Deputyship Order) Form must be completed in full. This can be found under the Useful Documents section of the website.

• Applicants must have resided in the UK for at least 3 years and must be a UK resident at the point of application. Where an application is from a non-EEA national, this will only be accepted where we receive documentary evidence of their indefinite leave to remain in the UK.
• A credit search will be carried out to confirm applicants are on the voters roll at current address and information displayed on the credit report will also be assessed to confirm that applicants have current / previous credit at addresses provided.
• Applicants will need to provide documentary evidence of residency at current and previous addresses on same basis as standard residential lending.
• We will utilise an electronic verification check to confirm identity for all applicants and will notify you if any additional documentary evidence is required once the DIP has been fully assessed.

• Standard Residential Lending Policy applies with regard to acceptable property types with additional restrictions as follows:-
  • Only Assured Shorthold Tenancy agreements/ Private Residential Tenancies/Short Assured Tenancies between 6 and 12 months will be accepted
  • Exposure in any one development will be limited to 10% or 3 properties whichever is lower.
• Standard Residential Lending Policy also applies with regard to unacceptable property types, with additional restrictions as follows, applicable to BTL property:-
  • Houses in Multiple Occupation (HMO)
  • Properties requiring any development work other than cosmetic refurbishment prior to being tenanted
  • Any property that is to be on a Sale and Leaseback arrangement, back to back transaction or where an assignable contract exists
  • Properties with more than 5 bedrooms
  • Any ex-local authority property that is still currently in pre-emption period
  • Any shared ownership/shared equity property that is still subject to any sales restriction / 2nd charge from developer/housing association
  • Student lets where there are more than 4 tenants
  • Where the applicant is not entitled to reside in the UK

Valuation Policy

• The Society will instruct a valuation for our benefit in all instances and the cost will be charged to the applicant. We will not accept any valuation instruction from any 3rd party.
• Each valuation will contain an estimated rental yield by the valuer and this will be used to determine whether the loan meets our rental stress test. Rental stress is calculated on an interest only basis even if a repayment or part/part loan is required.
• We reserve the right as to whether we issue a copy of the valuation report to the applicant.