Inform 30th August 2024

A few months ago we launched Skilled Worker Visa mortgages to support home ownership for Healthcare and Skilled Worker Visa holders working in the UK. This product has proved to be a great hit with brokers.

When creating this product, we knew that flexibility was key. We put together criteria that would break the unnecessary barriers preventing these deserving borrowers from achieving their home ownership goals.

Barrier busting criteria

• No minimum residency within the UK is required
• No minimum income requirements
• No minimum time remaining on the visa is required (if there is less than six months remaining, it must be evidenced before completion that the visa extension has been granted)

Maximum LTV is 95% (restricted to 90% LTV if residency within the UK is less than 12 months)

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A case that we’ve recently approved

APPLICATION

A couple in their 30s looking to purchase their first UK home in the East Midlands.

Mrs X is on a Health & Care Visa and is a support worker. Her income varies depending on how many weekend days/nights she works. Her partner Mr X is here on a dependant visa, and has been a contract worker for more than 12 months. However, he has only worked with his current employer since March 2024 and is currently on a 12 month contract.

The case is further complicated by the fact that Mr X’s income is about 35% higher than Mrs X’s, but since she is the primary visa holder it is her salary that forms the income ceiling for both of them (for affordability assessment purposes).

SOLUTION

This complex case was manually reviewed at our daily Mortgage Referrals Committee. Our senior decisionmakers carefully considered all the facts, and approved the application on the following basis:

For affordability, we used Mrs X’s last three payslips to provide an average annual income of £29,460. Although Mr X’s income is higher, it was matched at 100% of his partner’s income and an income multiple of 4.49 was applied to both.

Although Mr X had only been in his current employment for five months, we were able to use his previous contract work as evidence of income continuity.

The loan size of £229,500 at 90% LTV was deemed affordable and was approved.

Saffron for Intermediaries

Criteria Enhancements

Residential Affordability Support

• Pension Pots – We can consider a pension pot value in the affordability if the customer is eligible and plans to drawdown on the pension. We take a 30% haircut off the value of the pension pot and then we can divide the remaining pension pot value by the term to get an income towards the affordability. If a majority of the pension pot will be used in the affordability we will ask how the customer will afford their lifestyle when this pension is used, so any notes to explain their provisions and plans would be very useful.
• Investment Pots – We can consider a investment pot value in the affordability if the customer has access to withdraw from the investment and plans to drawdown on investment for the mortgage maintenance. We take a 40% haircut off the value of the investment value and then we can divide the remaining investment fund value by the term to get an income towards the affordability. If a majority of the investment fund will be used in the affordability we will ask how the customer will afford their lifestyle and plans without the investment fund, so any notes to explain their provisions and plans would be very useful.
• Passive Income – if the customer has an ownership in a business but is no longer involved in the business running we can consider this income to 80 years which is beyond our max age for earned income at 75 years old. We can consider this income on interest only or capital repayment.
• Self employed – We can consider 1 years trading and the most recent year when there has been an increase (with no cap) in the most recent year and the income is projected to continue at the higher level. We have enhanced our policy to be able to consider one off large pension contributions take in the affordability when it is a one off and a substantial increase from previous years.

BTL Affordability

• Top slicing – We can consider the customers disposable income towards the BTL affordability to increase the affordability to the ICR coverage of 110% . We have a minimum income of £75k for a sole income or an household income of £100k. this can also be considered for Ex-Pat BTL’s where the customer needs to earn the equivalent of on the minimum income’s in their overseas currency.

VISA’s

• Visa’s we can now consider  –
  • Skilled worker
  • Global Talent
  • Health and Social Care
  • Spousal
  • Pre-settled status
• We no longer have a minimum time remaining on the VISA requirement.
• Need the customer to have been in the UK for at least 2 years.
• LTV’s
  • Up to 75% LTV with no minimum income
  • Up to 90% we have a minimum income of £75k

Interest Only – Sale and downsize repayment vehicle.

• Criteria for £250k equity on application remains but we have now got flexibility to consider when the customer has a minimum of £150k equity on application and feasible plans to downsize for this amount of equity.
• Still consider interest only up to 70% LTV unless part and part and can consider up to 80% LTV when part and part with 60% LTV on interest only.
• No minimum income and affordability stress tested on interest only for borrowing on interest only.

Foundation Homeloans

The BTL by Foundation Q2 BTL Barometer

In our Q2 2024 BTL barometer, brought to you in conjunction with the Pegasus Insight Landlord Trends research report, we evaluate the trends which are impacting your landlord clients and how their portfolios are currently shaping up. The latest data shows that the average NRLA landlord has been letting property for close to 18 years. Within this, almost half (45%) are ‘very experienced’ and have been active as a landlord for over 20 years. This level of experience is reflected in the older age profile of NRLA members, with 77% aged 55+ and 39% retired. Those who have been operating for longer, typically, have larger, more diverse portfolios which achieve a higher yield on average vs. those newer to the PRS.

Click here to read the full story.

Royal London

Underwriting Improvements

1. We’ve improved our critical illness non-medical initial evidence limit for customers up to age 50, so more online terms will now be possible.
2. We have also significantly reduced when we need evidence of covid vaccination status. Almost all customers no longer need to provide this.
3. We have updated our to reflect these changes.

Full details of changes

We’re pleased to let you know about changes to our Non-Medical Limits (NMLs) for Critical Illness Cover. This demonstrates our commitment of being easy to do business with and to regularly review the key areas of our underwriting philosophy.

Non-Medical Limits – Initial Evidence Threshold

We’ve been reviewing our NMLs to reduce the need for routine medical evidence . The changes help take us to an even more competitive position in the market.

The changes apply to our NMLs for personal and business cover with improvements across age bandings up to age 50.

We’ve focussed on improving our competitiveness for younger ages where non-medical evidence has less value, so we don’t compromise the value that this routine evidence brings. Increasing the threshold where we require evidence is crucial in giving advisers more control of the application process and allows us to offer cover quicker to our customers.

Our adviser site has been updated with the latest non-medical limits table.

Other underwriting improvements

1. We will now only ask for vaccination status details, on cases reinsured with Gen Re, for customers aged 51 or older where they breach the reinsurance referral limit of £3.5m, and either of these apply:
   1. Total Royal London sum insured to be reinsured by Gen Re exceeds £15,000,000
   2. Total sum insured in the market exceeds £15,000,000
2. This broadly removes the current guidance which will benefit our high net worth proposition by removing barriers to sale.
3. Lastly, we are clarifying our guidance for AEGON business. We will not treat this as existing RL cover, but as existing market cover. This helps optimise our speed to offer and minimises evidence requests.

Bluestone Mortgages

Bath Building Society

Bath Building Society increase LTV on 95% Residential mortgage products.

Vida Homeloans

Read our latest blog on First Time Buyers

Precise

BIG NEWS: More rate cuts

Plus the return of residential limited editions.

What’s on offer:

• Residential. NEW limited edition products available. 2-year and 5-year fixed, all adverse tiers up to 75% LTV with rates from 5.19%. Minimum loan amount £125,000 with a 1% fee.

NEW residential limited editions

• Buy to let. Rates lowered by 0.25% across the range.
  Rates from 4.24%.

Lowered buy to let rates

• Standard and Tier 1 light refurbishment across 70% and 75% LTV reduced by 0.05%pm. Tier 2 heavy refurbishment also reduced by 0.05%pm across the range.

See bridging price cuts

• Refurbishment buy to let. Reduced by up to 1.05%, Tier 1 aligned with standard refurbishment to simplify the range. EPC C+ refurbishment now 0.20% cheaper than standard. Rates from 5.24%.

Reduced refurbishment buy to let

Our current processing times

If you’ve got a case to place, our current processing times are looking ‘happy and healthy’.

See the latest times

Questions? Call your BDM, contact  0800 116 4385 or use Chat.

Intermediaries only

West One

Residential Mortgage Criteria Changes

Highlights of our new criteria include:

• Skilled Worker, Health & Care Workers & UK ancestry visas up to 90% LTV
• Increased loan sizes – now up to £2.5m by referral
• AVMs up to £300,000 for remortgages, unencumbered properties, and transfer of equity mortgages
• Maximum retirement age increased – applicants stated retirement age or age 75
• Up to 100% of second job income
• Employed applicants in a probationary period within minimum employment of 3 months
• Reduced minimum property values of £75,000
• Increased age to 75 years old at the end of the interest only term
• New build houses up to 85% LTV
• Considering net profit and salary for limited company directors by referral
• Maternity leave – return to work pay now accepted

Teachers for Intermediaries

Remortgage with debt consolidation up to 90% LTV

We will consider remortgages with debt consolidation up to 90% LTV.

Key features:

• Affordability is assessed based on the debt being repaid.
• No debt-to-income ratio.
• Life events (home improvements, wedding expenses, a period with reduced income, etc.). Discuss with our intermediary team: Why has the debt built up / what is going to be different moving forward?
• There are ‘no product fee’ variable and fixed rate options available.
• Don’t have to be a teacher.

It is essential that your customer can afford the payments on any mortgage they take out. The longer the mortgage term, the more your customer will pay over time. All mortgages are subject to an affordability assessment and our lending criteria. Please remember that any mortgage your customer takes out will be secured on their home, and they must keep up the payments.

Call on 0800 378 669

Visit the website

Darlington Building Society

Mortgages must adapt to help support the government’s economic growth plans

Across the board, people are getting onto the property ladder later in life.

And whilst in many cases this is a common tale of first-time buyers struggling to raise a deposit for a mortgage, an emerging demographic has entered the conversation.

Professionals on a respectable salary, but with otherwise ‘complex’ requirements are also struggling to access mortgages for reasons such as obstructive and outdated lending criteria, or working in the UK on a VISA, or simply by being a single applicant. It’s time for mortgages to adapt to facilitate a progressive workforce.

Broker feedback dictates that mortgage options are limited for many thousands of young professionals, effectively hindering their homeownership aspirations.

Darlington Building Society has responded to the evolving needs of the UK’s workforce, by developing dynamic and logical mortgages. We have opened up the range of homes in scope for young professionals by lending up to 6x income for newly qualified professionals, lending up to 5.5x income for those earning £60k (or £90k on a joint application). This will in turn provide stability which will support employment levels in key sectors such as healthcare and financial services – both on the government’s target list to kick-start the UK’s economic growth.

A global stage

Recent research from Hays Recruitment highlighted the UK’s need for a steady supply of talent with the right skills, a view shared with Chancellor Rachel Reeves MP who said that delivering economic growth is our “national mission” and at the heart of her agenda.

Our national workforce is supported by people from all around the world. People committing their lives to supporting the UK workforce should in turn be able to put down roots here. Therefore, Darlington has developed mortgages for people on Skilled Worker VISAs with no minimum time in the UK, and at up to 90% LTV.

“We have seen an uptick in the number of applications coming through for skilled VISAs, accounting for almost 10% of all enquiries. If the affordability is there, we look for reasons to say ‘yes’ instead of ‘computer says no’” says Chris Blewitt, Head of Intermediary Distribution at Darlington Building Society: “Whether born in the UK or not, a lot of professionals, either single or joint applications, are finding they are being turned away elsewhere simply because of the stagnant housing market and limited options available on the high street. We have always adapted to support homeownership across the board, and it’s so important to support people’s homeownership dreams.”

Developing for the better

Darlington’s dynamic approach to lending has extended beyond its product range, Chris continues: “We take our broker partnerships seriously and we want to make it as easy as possible to do business with us. We’ve invested heavily over the past couple of years to deliver a faster, smoother service for brokers. This in turn means that we can help more people into the home of their dreams, which is what it’s all about. Using a mix of manual underwriting automated systems such as MSO (formerly Iress), and integrating steps like auto-populating applications and reviewing our procurement fees, we are making the whole experience smoother while being able to adapt to the changing needs of the market.”

We are in times of change, with a new government at the helm, and an increasing workforce essential to delivering its economic growth policy. Therefore, it’s crucial that people can enjoy the stability of homeownership to drive the UK’s economy forward. Tailored mortgages are just one way of helping that ambition.

Learn more about Darlington Building Society’s mortgages here.