Additional Borrowing
When applying for Additional Borrowing the product chosen must be from the same scheme as the main borrowing; the minimum additional borrowing is £5,000. A flexible product cannot be combined with any other product type.
Additional borrowing applications will not be permitted within 6 months of completion of the original mortgage.
Additions to loan
The items that can be added on to the loan amount are higher lending charge (where payable) and product fee. The maximum amount of add-ons as a percentage of purchase price or valuation (whichever is lower) must not be more than 4%.
Affordability
Affordability is calculated by the rental calculation specific to the product at the time the application is submitted.
Applicants
Minimum age: 25 years.
Maximum age: 75 years at the end of the mortgage term.
Not available to First Time Buyers.
Assignable Contracts
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.
Builder Cash Incentives
These include but are not limited to deposit contributions, cash-backs, contributions 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 point of sale.
Buy to Let Criteria
- Monthly rental income can be greater or equal to 125% of the monthly mortgage payment.
- A £2,000,000 lending limit applies to all Buy to Let borrowing across the Retail Division of Lloyds Banking Group (The Retail Division of Lloyds Banking Group consists of Bank of Scotland, Birmingham Midshires, C&G, TMB, Halifax, Intelligent Finance, Lloyds TSB, Lloyds TSB Scotland and Scottish Widows).
- A maximum of 3 properties applies to all Buy to Let lending across the Retail Division of Lloyds Banking Group, of which a maximum of 3 properties can be on House 2 House lending (The Retail Division of Lloyds Banking Group consists of Bank of Scotland, Birmingham Midshires, C&G, TMB, Halifax, Intelligent Finance, Lloyds TSB, Lloyds TSB Scotland and Scottish Widows).
- Maximum lending on each individual Buy to Let property of £1 million.
- Confirmation of anticipated rental income will be provided by the valuer as part of the valuation.
- Minimum acceptable property value or purchase price (whichever is the lower) is £40,000.
- The property may be let on a single assured shorthold tenancy or to a company on a corporate let.The maximum term is 12 months. Our consent is not required to renew the tenancy.
- The maximum number of occupants is 5. They must all be party to the agreement. It is the landlords responsibility to ensure that all legislation is complied with including (but not restricted to) legislation relating to Tenancy Deposit schemes and HMOs (Houses in Multiple Occupation).
- The maximum number of bedrooms allowed for a Buy to Let property is 5.
- Student lets, holiday lets and tenants claiming housing benefit, rent rebate or rent allowance are not acceptable.
- Multiple tenancies (where each tenant signs a separate agreement and/or has separate facilities) are not acceptable.
- If the property is in Scotland, the landlord must register with the relevant Local Authority.
- Applications which involve a sale and leaseback arrangement are not acceptable.
Conveyancers
In order to act jointly for both the customer and Birmingham Midshires, or to act solely for Birmingham Midshires, a conveyancer must be on the Lloyds Banking Group panel of conveyancers.
Definition of Confirmed Income
100% of basic salary, cost of living allowance, housing or rent allowance, service/state pensions and car allowance.
We also consider up to 60% of regular or non-guaranteed overtime, mortgage subsidy, bonus and commission. Exclusions - travel allowance and expenses.
Definition of income
A minimum income of £25,000 per annum is required.
- Rental income cover requirements can be found by using the Buy to Let rental income calculator found at bmsolutions.co.uk. Monthly rental income can be greater or equal to 125% of the monthly mortgage payment.
- Any residential mortgages with the Group must be adequately covered by your client's current income
Deposits
The deposit for any purchase should come from the applicant(s) own resources. However, a builder's deposit up to a maximum of 5% of the purchase price is allowable on applications where the LTV does not exceed 65% on a new build property. Where there is a purchase at undervalue, the maximum loan will be based on the discounted purchase price. The valuer must be aware of any incentive and refer to this in the valuation report.
Any deposit coming from a directors loan account is not acceptable
Distressed Sales
Applications which involve a distressed sale are not acceptable.
Documentation required
All existing mortgage holders/local authority tenants:
- Latest lender’s or landlord’s statement.
A copy of the Assured Shorthold Tenancy Agreement may be required for Additional Borrowing applications.
Exposure limits
We would not normally allow exposure on any development to exceed 30% across the following brands: Birmingham Midshires, Bank of Scotland, Halifax, TMB and Intelligent Finance - the limit (which may be less than 30%) will be dependent on size, nature, local market conditions and status of the development.
Finder's Fees
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.
Free remortgage package (where applicable)
The Free Remortgage Service is available on all properties in the UK, using Birmingham Midshires designated remortgage service through Enact. An additional charge will be made for any non-standard legal work including deeds of postponement, transfers of equity and registering of title. Any additional charges will be advised by Enact to the borrower prior to the work being carried out. Please note remortgage products offering the Remortgage Service and other incentives must be taken as a complete product.
Household insurance
Property will only form an acceptable security if insurance cover, under normal terms including subsidence and flood cover is confirmed.
Interest
Interest is calculated on a daily basis.
Life cover
Applicant to satisfy themselves that they have made proper provision for cover.
Policies will not be assigned.
LTV/Loan Size
75% £25,001 to £1million. The maximum LTV for new build properties including newly converted (within 12 months of application) and previously unoccupied properties is 65%. This includes Additional Borrowing applications where the main loan completed within the last 12 months.
Certain Buy to Let products have a lower max LTV, where a product with a lower LTV is combined with a product with a higher LTV the lower LTV will apply to the whole loan.
If the individual loan amount or total borrowing exceeds £500,000 the application will be subject to a full underwriter review which may lead to additional information being requested.
Minimum employment period
Employed applicants will be expected to have been employed for a minimum of 3 months in their current job and had 12 months continuous employment.
Self-employed applicants must be self-employed for a minimum of 2 years.
Monthly payments
All payments must be made in sterling by direct debit through the UK direct debit system. The direct debit must be in place prior to completion.
New Build
A New Build property is classed as any property being occupied and/or sold for the first time on the open market in its current state.
This includes brand new property, refurbished property (re-developed existing residential property) or converted property (re-developed non-residential property).
All lending decisions are based on valuation or purchase price (whichever is lower).
Portability
All products are portable which means that the applicant can keep the same rate and term of their chosen mortgage if they move during the product period. If either the scheme or their circumstances change they may not be able to keep this product and any early repayment charges will be payable.
Proof of residence
If the applicant(s) is/are not on the voter’s roll at the current address, proof of residence must be provided: e.g. bank/building society statement credit card statement, or Council Tax statement.
Properties being remortgaged to BM Solutions
Evidence of last 12 months mortgage payment. Each case is considered on an individual basis. We may request additional information where considered appropriate and relevant to the lending decision.
Remortgage
For remortgage applications a customer must have owned the property for a minimum of 6 months.
Repayment methods
Repayment, interest only or combination. The method(s) for repaying interest only element must be specified
Security
Right to Buy/Shared ownership applications are not acceptable.
First mortgage on freehold properties in England, Wales and Northern Ireland, properties in Scotland or leasehold properties in England, Wales and Northern Ireland with at least 70 years unexpired term at the time of application.
If a flat is part of a conversion where the total number of flats in the scheme is above 8, the valuer must confirm that the whole conversion project has been or will be completed to a high standard.
Freehold flats/maisonettes are unacceptable.
Residential security only.
We require that a newly built property (or one being occupied for the first time) has the benefit of building standards indemnity insurance, for example a 10 year warranty from the National House Building Council or Zurich Municipal Insurance. (For other acceptable Indemnity Insurance providers - please refer).The only exception to such indemnity insurance cover is where an architect or qualified surveyor is employed by the applicant to supervise the building of the property (Certain other qualified consultants may be acceptable - please refer).
Sub-Sales and Back to Back Transactions
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. 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).
Term
5-40 years.