Further advances and product transfer lending criteria

Where a firm makes a personal recommendation to a client to enter into a regulated mortgage contract where a main purpose* is to consolidate existing debts, the following must also be taken into account where relevant, in assessing whether the regulated mortgage contract is suitable for your client:

• The costs associated with increasing the period over which a debt is to be repaid;
• Whether it is appropriate for the client to secure a previously unsecured loan; and
• Where the client is known to have payment difficulties, whether it would be more appropriate for the client to negotiate an arrangement with his creditors rather than to take out a regulated mortgage contract.

For further advances

If your client has any of their existing debt on interest only they will need to sign a declaration of intent to confirm that they have a repayment plan in place to repay the capital at the end of the term. The declaration of intent form can be found by choosing "Literature" and the "Mortgage literature" section.

Further advances can only be taken on a capital and interest repayment basis. Where further advance is to be conducted on a capital and interest repayment basis and your client has an existing interest only debt, a declaration of intent must still be completed for the existing interest only debt.

Only if the declaration of intent and, where relevant, the evidence to support the further advance meets our criteria and covers the full amount to be conducted on an interest only basis, can a further advance offer be produced.

The declaration of intent is clarification of the original plan your client intended to use to repay the debt. As such it can include repayment plans which are no longer acceptable for new interest only lending.

For product transfers

If your client has any of their existing debt on interest only, they will need to sign a declaration of intent to confirm that they have a repayment plan in place to repay their capital at the end of the term. The declaration of intent is confirmation of the original plan your client intended to use to repay the debt. As such it can include repayment plans which are no longer acceptable for new interest only lending.

Only if a signed declaration of intent to cover the full interest only amount is received and meets our criteria can a product transfer be completed.

For more information on interest only applications view our questions and answers page.

Advising you of the outcome of our assessment

When we have completed our calculations, we will contact both you and your client to let you know if the evidence provided is acceptable or not. Where the repayment plan is inadequate, you will need to discuss how to proceed with your client.

Repayment plans

The table below shows the repayment plans we accept and the evidence required in each case. It also shows the methods we use to assess whether a repayment plan meets our lending criteria. This information is only a guide. A mortgage offer will only be issued once we have confirmed that the evidence supplied meets our criteria.

A mortgage interest only repayment calculator containing our assessment calculations is available. You can use this calculator to give your client an indication of the amount they may be able to borrow on an interest only basis, based on our criteria.

Repayment plan	Evidence required	Assessment method
Endowment (UK) Both with profits and unitised plans.	Copy of latest projection statement dated within last 12 months.	Endowment companies will present three growth rates to a client with the middle one being the most likely projected outcome. We allow up to 100% of projected amount using the middle % figure currently 6%.
Stocks and Shares ISA (UK) Only UK based investments quoted within the FTSE index held in sterling are acceptable Unit trusts / Open Ended Investment Companies (UK) Investment Bonds (UK)	Copy of latest statement dated within last 12 months.	We will compare the value of the ISA/OEIC/Investment Bond with the amount of interest only lending required, taking into account the remaining term of the mortgage and future market volatility. The valuation we will assign to the investment is 80% of the current value which must be greater than £50000
Stocks and Shares (UK) Only shares quoted within the FTSE index held in sterling are acceptable	Copy of share certificates, nominee account statement or confirmation from a recognised stock broker containing evidence of share holdings together with their valuation.	See Stocks and Shares ISA.
Pension (UK)	Copy of latest projection statement dated within last 12 months.	For the purposes of backing an interest only mortgage, a maximum of 25% of the current fund value with the current value to be greater than £1 million.
Sale of other residential property (UK) Due to valuation and verification requirements this is restricted to properties within the UK.	Completed interest only - other residential property form and, if the mortgage lender is outside Lloyds Banking Group, a copy of the latest mortgage statement dated within last 12 months.	We will allow 80% of the current equity value but the individual property value must be greater than £50,000 at point of application.

Important points on the assessment:

• We are not providing advice on your client's repayment plan(s) or making any guarantee that their plan(s) will be sufficient to repay the outstanding balance (capital) at the end of the mortgage term.
• Your client should review their plan(s) regularly during the term of their mortgage to make sure it is on track to repay the outstanding balance.
• Periodically, we will ask your client to provide evidence of their repayment plan(s). If your client is unable to satisfy us that their repayment plan(s) remains on track to repay the outstanding balance on their mortgage, we may ask your client to transfer some or all of their mortgage onto a capital and interest repayment basis.
• Please remember it is your client's responsibility to ensure they have sufficient funds to repay their outstanding balance at the end of the mortgage term. If they are unable to do so, their home may be repossessed to repay the outstanding balance.

Important points on repayment plans:

• Repayment plans CANNOT be accepted if they include the name of anyone NOT named on the mortgage.
• Your client can use more than one repayment plan to cover their total interest only amount. In this case, please send the relevant evidence for all repayment plans.

• The following are NOT acceptable repayment plans:

  • Sale of main residence.
  • Sale of other commercial property.
  • Sale of non property assets
  • Inheritance.
  • Bonuses.
• If your client wishes to use their buy to let portfolio as their repayment plan, you should select 'Other investments' as the repayment plan on the Halifax Intermediary system. This option should not be selected for any other plans.

When 'Other investments' is selected, a text box appears for you to provide further details; the term 'buy to let' should be entered in that box. The repayment plan evidence required for a buy to let portfolio is the same as for sale of other residential property.

If an existing mortgage is already FSA Regulated then it will stay FSA regulated regardless of a further advance or product transfer.

If, however, a mortgage is non-FSA regulated and a further advance is required, to give the client the regulatory protection for the entire mortgage, the existing debt is refinanced to make the whole mortgage FSA Regulated.

Please note that a stand alone product transfer would not make the mortgage regulated.

Further advance combined with a product transfer

Product transfers can only be done at the same time as the further advance if the additional borrowing will mean the whole debt is re-financed. For example, if the existing mortgage is unregulated and the further advance is making it FSA Regulated.

If the existing mortgage is already FSA regulated then the product transfer must be done after the further advance has completed.

Where the account is already a regulated mortgage contract and the client requires a further advance, there are 3 possible scenarios:

• Current mortgage on repayment - further advance must be on repayment.
• Current mortgage is on part repayment and part interest only - further advance must be on repayment.
• Current mortgage is on interest only - further advance can be on either repayment or interest only. The interest only amount on the current mortgage must not be altered.

Additional borrowing applications will not be permitted within 6 months of completion of the original mortgage.

Where the mortgage has been at least one month in arrears within the last 3 months, a further advance application cannot be accepted.

The client should be advised to bring their account up to date and be ‘arrears free' for at least 3 months before re-applying.

This rule also applies to any stand alone product transfers that you may wish to process, however, you can process the product transfer as soon as the account is up to date with no requirement to wait 3 months.

Maximum loan to value 80%.
The list of acceptable reasons on the system are as follows. Please note that there are some restrictions noted in brackets. These restrictions do not apply where the LTV is below 75%.

• Business purpose (restriction - not for injection of capital).
• Consumer goods (restriction - not for holidays).
• Debt consolidation.
• Gift to relative.
• Home improvements (shared ownership included).
• Investment purpose (restriction - not for currency speculation or the purchase of stocks and shares).
• Purchase freehold - (conveyancer required).
• Purchase additional land adjacent to property (conveyancer required).
• Purchase extension to lease - (conveyancer required).
• Purchase additional share (shared ownership).
• Repay subsequent charge (refer to subsequent charge in the special situation section before proceeding).
• Repairs.
• Second home loan (restriction - not for purchase of a time share).  Only 1 second home loan allowed and max LTV of 65% for all new build (including initial occupancy) properties.

N.B. These circumstances have some important restrictions:

• Right-to-buy - home improvements only if within first 2 years of the discounted period.
• Purchase of a second home (see lending limits).
• Second homes - home improvements only.

Please see the flowchart below in the event of a name change.

Name verification is required only.

Any one of the following original forms of verification is acceptable providing they are current:

Primary verification	Secondary verification
Any one of the following original forms of verification is acceptable providing they are current:	Any one of the following original forms of verification is acceptable providing they are current:
Personal allowance book. Passport. Driving licence. Home Office EU Residency Permit. Personal allowance book. Firearms Certificate. HM Revenue & Customs Tax Notification. Benefit Allowance Confirmation Letter. Building Industry HM Revenue & Customs Sub Contractor's Certificate.	Credit card. Cheque guarantee card. Employers ID. National Student Union Card.

How to certify a document

We do not require you to endorse photocopied or faxed documents as true originals before submission.
Documents for anti-money laundering requirements e.g. proof of name and address do not normally need to be sent to us. However you need to retain evidence of these documents in your own files. If we ask you to supply us with anti-money laundering documents these will need to be endorsed in accordance with the following procedure:

• Photocopy the document.
• Write on photocopy 'Certified copy of original'.
• Where document contains a photograph, check it is a good likeness of the client and write 'Good likeness to person'.
• Sign the photocopy and print underneath your signature: Intermediary name/company/firm (or company stamp), the date.

Further advance applications where the mortgage is already a Regulated Mortgage Contract (RMC), or is not currently a RMC and will not become a RMC following completion:

• The new further advance can be taken over a new term in whole years (the new term will also apply to any existing additional lending term 1 loan present).
• The new further advance can be taken over the remaining term of an existing additional lending term 1 loan.

Further advance applications where the mortgage is not currently a RMC but will become a RMC following completion (refinanced):

• The new further advance can be taken over a new term in whole years (the new term will also apply to any existing additional lending term if there is a loan present).
• The new further advance can be taken over the remaining term of an existing additional lending term 1 loan.
• Where a new term has been selected for the further advance, the new term can be applied to the whole mortgage if required.

Typically the following allowances are taken into consideration when assessing income on further advances:

Primary income 100% allowed	Acceptable proof (listed in order of preference)	Instruction given by system
Permanent contract of employment (basic salary). PAYE limited company director (with less than 25% shareholding)	Latest payslip.	Latest payslip required.
Short or fixed term contract	Latest payslip.	Latest payslip required.
Agency workers	Latest payslip.	Latest payslip required.
Employed by family business	Latest payslip along with corresponding bank statement to show salary credit.	Latest payslip required.
Probation contract	Latest payslip.	Latest payslip required.
Retirement	Private/ company pension, one of the following; Latest payslip. Latest bank statement. Latest pension statement/ reference dated within last 12 months. P60 For State pension: 1 full month bank statement to show source of income.	Please verify documentary evidence of other income.
Working Tax Credits	Latest 1 month full bank statement or HMRC tax credits award letter.	Please verify documentary evidence of other income.
Maternity pay	Latest payslip received when working.	Latest payslip required.

Secondary income 60% allowed	Acceptable proof (listed in order of preference)	Instruction given by system
Overtime/ bonus/ commission	Received monthly or quarterly 3 months payslips supported by YTD figure If received Annually Payslip showing bonus payment or latest P60.	Latest 3 payslips required.
Additional duty hours	3 months payslips supported by YTD figures.	Please verify documentary evidence of other income.
Disability living allowances: Attendance Allowance/ Constant Care Allowance/ Incapacity/ Severe Disablement Allowance/ Industrial Injuries Disablement Benefit/ Mobility Payments/ Thalidomide Trust Income Note 'Incapacity Benefit' is being replaced by 'Employment Support'	1 month full bank statement showing source of income or most recent award letter DLA award letter.	Please verify documentary evidence of other income.
Child Benefit	No requirement to verify child benefit.
Child Tax Credit	Latest 1 month full bank statement or HMRC tax credit award letter.	Please verify documentary evidence of other income.
Foster Care Allowance	Latest SA302	Please verify documentary evidence of other income.
Maintenance - including  guardians allowance	3 months full bank statements OR Court order OR Maintenance assessment OR Letter from Child Support Agency.	Please verify documentary evidence of other income.
Mortgage subsidy	Latest payslip.	Please verify documentary evidence of other income.
Nursing bank	Latest 3 months payslips.	Please verify documentary evidence of other income.
Rental income	Property is currently let - obtain one of the following. 3 months bank statements. Tenancy agreement. Letter from letting agent, accountant or solicitor. Intending to let existing property: obtain letter from letting agent confirming expected rental payment. Letting agents are required to be ARLA or NAEA registered.	Please verify documentary evidence of other income.
Shift allowance	Latest payslip.	Please verify documentary evidence of other income.
Town, area or car allowance	Latest payslip.	Please verify documentary evidence of other income.
Widowers Parents Allowance	1 month full bank statement showing source of the income or HMRC tax credits award letter from DWP confirming income.	Please verify documentary evidence of other income.

Further guidance on the information required within the documents can be found in the income documentation section.

The intermediary should establish, preferably prior to keying the application for further advance and product transfer, whether the property on the account is the client's main residence.

If the client now resides in the property, then the application can be processed following a call to ISC.

If the client is still letting the property, due to our policy rules, the request cannot be processed unless the client is a HM forces employee - regardless of whether the HM forces employee is still letting the property or not, the application can be processed following a call to ISC.

New lending for home improvement reasons may result in your client's existing cover being insufficient. If required, your client should contact their insurance provider.

Valuation	Basic Limit	Maximum HLC	Maximum loan
Up to £2,000,000	75%	5%	80%
£2,000,0001 - £2,133,333	75%	Sliding Scale 5% to 0%	£1,600,000
Over £2,133,333	75%	nil	75%

• Additional lending on a main residence - further advance is permitted up to 75% LTV for business purposes (but not for an injection of capital). This includes buying a property, which is to be rented out.
• Additional lending limits on properties other than a main residence - This is allowed to carry out improvements to the property on the basis that lending does not exceed 75% LTV.
• Additional borrowing taking the mortgage debt above 75% is permitted to purchase a second property, which is not to be rented out. This is, however, on the understanding that the Halifax's normal lending limits are not exceeded.
• Additional borrowing applications will not be permitted within 6 months of completion of the original mortgage.
• Additional borrowing is subject to a minimum loan of £5,000.

If a SCG is present your local processing centre will contact you if there is a problem with the SCG type or problems in obtaining a Letter of Postponement(LOP).
If any of the following SCG reasons are present the further advance cannot proceed:

• Bankruptcy inhibition.
• Bankruptcy order.
• Creditors notice.
• Drug trafficking offence.
• Receiving order.
• Sequestration.

If the SCG is registered to a non-clearing bank and is to be repaid, a conveyancer must be instructed.

If the client does not intend to repay the SCG using the further advance and will therefore continue after completion, Halifax will request a LOP from the SCG lending company. If the LOP is not granted the further advance cannot proceed. It is not unusual for the SCG lending company to refuse to grant an LOP.