Mortgage lending criteria

Our mortgage promise provides a credit score facility using minimal information.

It states how much we can lend and is valid for three months subject to a valuation and the information supplied being correct.

The details of the customers bank account from where the mortgage will be paid should be keyed at application.

There is no requirement to complete a Direct Debit mandate form, but details must be provided before the offer will be issued.

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.

The first monthly payment is always collected in the month following completion, for example if a mortgage completes in June the first payment will be collected in July. This will be collected on the customer’s chosen monthly payment date unless completion occurs in the last few days of any month and results in less than 4 working days between the completion date and the customer's chosen payment date (excluding those days), the first payment will then be collected on the 10th of that month. This date will then revert to the customer's chosen payment date on the following month.

The first monthly payment includes an amount of ‘Initial Interest’ from the day of completion to the end of that month plus the first monthly mortgage payment. For example:

• If completion occurs on the 15th, interest is calculated from the 15th to the end of the month and then added to the first payment
• If completion occurs on the 5th, interest is calculated from the 5th to the end of the month and then added to the first payment

The 'Amount of each instalment' section of the mortgage illustration sets out a first payment assuming a mortgage completes on the 1st of the following month. A customer’s first monthly payment may be different as it will depend on when the loan starts. We write to all customers when the mortgage starts to tell them when we will collect their first and subsequent payments.

The remortgage service is available on most, but not all, of our remortgage products. Where your customer uses our remortgage service, we will pay our conveyancer’s legal fees, any registration fees and, if the property is leasehold, their landlord's fees for answering our conveyancer's enquiries.

Your customer will have to pay any fees their existing lender may charge in connection with repaying their current mortgage.

These include your customers existing lender's conveyancer's fees if the existing lender does not allow our conveyancer to act for them too. Halifax conveyancer's may be able to offer to do extra legal work for your customer at the same time as the remortgage (not in Northern Ireland). If your customer decides to use them, they will make a separate charge for the extra work and your customer will have to pay for it. Your customer should ask about the charge before asking the conveyancers to do any extra work for them.

Your customer can choose their own conveyancer to act. Please note also that our remortgage service is not available with some of our remortgage products and your customer will have to choose their own conveyancer to act if they decide to have one of these products. This conveyancer will act for Halifax in the remortgage, provided they are on our panel of conveyancers, and your customer must pay the legal charges, and any search fees, registration fees or other costs, whether or not the matter goes ahead. The search insurance facility will not be available.

The remortgage service is available for customers who are capital-raising on a mortgage-free property.

Scottish Properties - Closure of Sasine register

As part of the goal to complete the Land Register, the General Register of Sasine closed to standard securities on 1 April 2016. This change only affects remortgaging of Scottish properties that are on the old Sasine register.

As part of our commitment to make things easier Halifax Intermediaries will cover the standard costs for transferring from the Sasine register to the Land Registry within the conveyancing element of our remortgage service, wherever possible.

However, some transactions are deemed to have an additional level of complexity where we won’t be able to cover the full costs as part of the remortgage service. For these complex cases the conveyancer should discuss the case with the customer to establish the level of additional fee required, which is then payable by the customer. The Scottish Conveyancing panel has estimated it expects approximately 40% of cases to be complex.

Some examples of where the conveyancer would classify the transfer of the property tile from the Sasines Register to the Land Registry case as complex include:

• Plans report states either an overlap or shortfall between the legal and occupational extent
• Title is complex with split-off writs, exceptions and additions (essentially requires a full examination of title to draft the security and obtain a relevant deed plan)
• Property is a flat or part of a tenement block and there are common parts etc, obtaining of neighbouring titles would be required
• Property is rural and copies of neighbouring titles are required to check servitudes/access rights etc.
• These are some high level examples considered by conveyancer panel firms as most likely to occur (but are not limited to these examples). The specific costs associated to complex cases/scenarios will vary, and panel firms will apply an hourly rate and discuss all matters with customers up front prior to commencing any further with the transaction.

For face to face verification, one document from the Single Identification list can be used to verify the customer's name together with either their date of birth or residential address.

Where the customer has not been physically present for identification purposes, two separate documents must be provided to verify the customer's name, residential address and date of birth.

Documents must be originals and can only be used once throughout the whole process; i.e. used once for either address verification or for identification.

If we cannot complete electronic verification, we need to ensure that the customer is who they say they are from documents which confirm their identity and where they live.

Depending on the type of verification document provided, the customer will need to provide either one or two documents FCA registered firms must ensure that documentation relied upon to verify aspects of a customer's identify is copied and retained. Sufficient and accurate information must be recorded on our application system. You must also correctly indicate if the case is face to face or non face to face.

We reserve the right to request copies of identity documents.

Permanent right to reside is required for all applicants on all applications which do not meet the following criteria:

• The customer (or either customer on a joint application) has lived in the UK for more than 5 years OR
• Loan to Value (LTV) is <=75% OR
• Application income >=£100,000

When proof of permanent right to reside is required a next step message will advise 'Proof of permanent right to reside in the UK is required for (applicant name)' and this must be provided for all customers on the application.

If any of the criteria above are met the message will not show and the application can proceed without proof of permanent right to reside being required.

Permanent right to reside can include:

• As part of the EU Settlement Scheme EEA, EU and Swiss citizens, living in the UK by 31 December 2020 can apply to continue to live in the UK after 30 June 2021 and will receive one of two statuses which are both acceptable:
  • Settled status (awarded where they have lived in UK for at least 5 years and also known as 'indefinite leave to remain under the EU Settlement Scheme').
  • Pre-settled status (awarded where lived in the UK for less than 5 years and they can re apply for settled status after 5 years continuous residence in UK has been reached).
• Indefinite leave to enter or remain.
• Republic of Ireland citizens do not need to apply under the EU Settlement Scheme and have automatic permanent right to reside in the UK (no proof of permanent right to reside is required for ROI citizens).

Proof of permanent right to reside could be verified to one of the following:

• Immigration status 'share code' customers who can view their immigration status online at gov.uk (particularly EEA nationals) can provide a share code which lasts for 30 days and we can use to view their immigration status e.g. settled or pre-settled status
• Indefinite leave stamp in passport including: Indefinite Right (or Leave) to Remain/Enter; Right of Abode; 'There is at present no time limit on the holder's stay in the United Kingdom'
• Biometric Residence Permit showing 'indefinite' rights to remain (this includes 'indefinite leave to remain', 'indefinite leave to enter' or 'no time limit')
• Letter from the Home Office confirming indefinite right to remain in the UK

To determine if a customer has lived in the UK for more than 5 years we will use data provided by the credit reference agencies. In some instances we may require proof of residence in the UK for over 5 years.

The application income of >=£100,000 will include both incomes on a joint application and is the total of basic, overtime, bonus and commission for employed applicants or the latest year’s income for self employed customers, plus pension income.

On Shared Equity and Shared Ownership schemes, to determine if the <=75% loan to value (LTV) criteria has been met, the percentage LTV is calculated as the loan amount against the value of the customer's equity share. (On Shared Equity applications this differs to the LTV used for selecting from the product range which is the loan amount against the total purchase price).

Applications from non-UK nationals holding diplomatic immunity are not acceptable.

If we ask you to provide ID documents, you must ensure that the following is present to satisfy certification requirements. This must be recorded by the FCA Registered Mortgage Intermediary:

• Name of the certifier;
• Signature of the certifier;
• Date of certification, which must not be older than 3 months at the time of the application and;
• Written confirmation from the certifier stating "I hereby certify that this is a true and correct copy of the original document as sighted by me" (variations are acceptable).

Halifax use affordability as a way of assessing how much they will lend. Where the loan requested is above the maximum loan available from our affordability calculation the loan amount should be reduced to proceed or the application will be declined. Please refer to our affordability calculator.

PLEASE NOTE: The affordability calculator will give a guide to the amount we would be willing to lend however, as no credit search is carried out please be aware that this amount is subject to change once the Decision in Principle (DIP) is keyed.

When calculating affordability, the following Loan to Income (LTI) caps also apply. These can be used to calculate the maximum loan that would be available based on income but these are caps and the actual maximum loan could be lower and can be impacted by loan to value and credit score.

• If the loan is for an Affordable Housing scheme (Shared Equity or Shared Ownership) then a scheme max LTI of 4.49x would apply.
• A maximum LTI of 4.49x will apply if there is any element of self employed income on an application. For loans where the application income >£75k, and there is any element of self employed income the max LTI is restricted to 4.00x for loans >£500,000 to £750,000 of 85.01% to 95% LTV and for loans >£750,000 to £1m of 75.01% to 85% LTV.
• The level of credit score achieved and overall credit profile may restrict the LTI applied; this may be restricted to 4.49x, to 5.00x rather than 5.50x shown and if income >£75k and loan >£500k where 4.49x shows this may be restricted to 4.00x.
• A different maximum LTI may sometimes apply as a result of the particular product selected.

For some customers we may make a deduction within our affordability calculation to allow for financial planning commitments the customer may have going forward.

Within our affordability calculation we may apply an affordability adjustment for some contractors to take into account likely business expenses.

In some circumstances we may deduct credit commitments as ongoing in our affordability calculation even when customers have declared an intention to repay these. If the maximum loan available is reduced as a result then the loan amount must be reduced to proceed.

When calculating affordability on interest only loans, Halifax will take into account the monthly premiums payable for the relevant repayment vehicle i.e. existing endowment or new or existing ISA. Please ensure the premium(s) is specified at both DIP and full application.

Affordability must also include future changes to income and expenditure.

Where the maximum loan available is below that requested there may be the option to extend the term (up to retirement) or extend term into retirement (subject to evidence of adequate retirement income).

Please note, if the maximum loan available is reduced due to income not being evidenced at the declared level then the loan amount must be reduced accordingly.

Only in the below scenarios may we consider a loan amount above the maximum loan from our affordability model:

• Existing Halifax mortgage customers with no increase in in loan amount or loan to value (LTV) compared with their current mortgage (see Existing Customers).
• There is additional income, not previously considered, that is expected for the life of the mortgage and can be evidenced in line with our requirements.

For Mortgage Prisoners criteria, please refer to our Mortgage Prisoners section.

Foreign currency income will not be accepted for new mortgage or remortgage applications for new and existing customers, including porting, transfers of mortgaged property (TOMP), and further advances.

The only exceptions to this are further advance applications for essential repairs to the mortgaged property and product transfers.

Foreign currency income is any income other than sterling received by a customer. Foreign currency income paid into a UK bank account and subsequently transferred to sterling is still considered to be foreign currency.

Where a customer's income comes from a contract and they are not employed on a permanent basis they are classed as a contractor. This will include individuals who are self-employed and pay their own tax, those who are employed via an umbrella company who deduct their tax and people who are essentially employed but on a fixed/short term contract e.g. 12 months.

Contractors can be treated as self-employed or employed for income verification purposes:

Self Employed

Treat as Self Employed if:

• The customer pays their own tax, OR
• Has more than 1 contract, OR
• Has set up a limited company and employs other contractors.

Income is confirmed as standard for self-employed customers.

Employed

Treat as Employed if:

• Tax is paid by the company they work for (or they are employed via an umbrella company who deduct tax) OR
• Contractors who earn more than £500 per day or £75k per annum, OR are an IT contractor on any income, can be treated as employed irrespective if the customer pays their own tax, or classes themselves as self-employed. (The only exception to this is where a customer has more than one contract or they have set up a limited company and employs other contractors, in which case they should be treated as self-employed).

Additionally to be treated as employed the customer must have either:

• 12 months or more continuous employment, with 6 months of the contract remaining, or
• 2 years continuous service (for the last 2 years as at the date of application) in the same type of employment

When we are treating a contractor as employed for income verification these are our requirements:

Contractor who pays own tax, or it is deducted by umbrella company (including IR35)

• Copy of latest contract and latest payslip required (or where payslips not issued latest bank statement).
• Income to be used is the lower of the gross value of the contract or income calculated from payslip/bank statement.
• Gross value of contract is calculated as daily rate on the contract x 5 days per week x 46 weeks per year (or hourly rate x 7 hours per day x 5 days per week x 46 weeks per year). Unless the contract states the actual hours/days worked are lower in which case use these figures.
• Income from payslip/bank statement is calculated by multiplying the gross pay received to give an annual figure and then calculating the income based on a 46 week year (unless the contract states the actual weeks to be worked is lower in which case use these figures) e.g. multiply gross pay on a monthly payslip x 12, divide by 52 weeks and multiply by 46 (or multiply the gross pay on a weekly payslip x 46).
• The total gross pay showing on umbrella payslips may be broken down by basic salary, commission, ‘additional taxable income', holiday pay etc. but as long as the contract confirms the contractor is paid via a daily rate, or hourly rate, the income does not need to be split into these separate elements and can all be keyed as basic salary.
• The lower of the two figures calculated is keyed as income and used for affordability.
• For customers who have set up a Limited Company or a Limited Liability Partnership (LLP) the income evidence must be from the actual contracted employer not their own Limited Company.
• Contractors who are set up as a Limited Company may not be entitled to the full income of the contract where there is more than one shareholder. If there are other shareholders, and they are also to be named on the mortgage the income from the contract must be keyed for one customer only and no income from this contract can be keyed for the other applicants that are shareholders. If there are other shareholders, but they are not to be named on the mortgage the income should be keyed to reflect the customer share e.g. if 50% share then 50% of income should be used.

Fixed/Short Term or Agency; tax is deducted by employer (not including IR35)

• The latest payslip must be used to evidence income, or latest 3 payslips where other income is being used.
• Income from payslip is calculated by multiplying the gross pay received to give an annual figure and then calculating the income based on a 46 week year e.g. multiply gross pay on a monthly payslip x 12, divide by 52 weeks and multiply by 46 (or multiply the gross pay on a weekly payslip x 46).

Construction Industry Scheme Contractors (CIS)

Applications from customers employed on a Construction Industry Scheme (CIS) Contract will be considered. Income should be evidenced using the latest 3 months consecutive payslips/invoices/statement along with corresponding bank statements (this could be from the same or different contracts). For example, if income in January, February and March is used, payslips/invoices/statement and corresponding bank statements must be for January, February and March. An average of the latest 3 months income should be used. This average amount should then be calculated based on a 46 week year e.g. multiply the average monthly pay x 12, divide by 52 weeks and multiply by 46.

If no income is received or the customer is unable to provide both pieces of evidence of income, then ‘zero' income must be used for that month.

Customers should be treated as self-employed if they pay their own tax or sub contract to more than one company.

Zero hours contracts

Applications from customers employed on a zero hours contract for over 12 months will be considered. Proof of all income in the last 12 months is required and that total income figure will be used.

Probation

Income from probationary employment is only used where the probationary period is part of a permanent contract. If the contract is purely probationary with the employer having the option to terminate the contract then this income cannot be used.

It is important that probationary contracts are keyed accurately as follows:

Where the applicant receives an offer of permanent employment and the contract states an initial probationary period e.g. three or six months, it should be keyed as 'permanent'. The income will be used in the affordability assessment.

Where the applicant is offered a probationary contract, e.g. for three months, at the end of which the employer has the option to determine if a permanent contract will be offered, it should be keyed as ‘probationary'. The income will not be used in the affordability assessment.

Professional Sports People

Applications will be considered from Professional Sports People where either continuous employment of 12 months or more with 6 months of the contract remaining or 2 years continuous service (for the last two years as at the date of application) in the same type of employment can be confirmed. It is essential to establish that such individuals will have the ability to sustainably meet the monthly repayments as they near the end of their career or if their career should be ended abruptly due to injury.

If a customer has been furloughed by their employer as a result of Covid-19, they will have to have returned to work before we will use their income to support a mortgage application.

We will need the latest payslip showing they are being paid in full by their employer. Where there is any furlough income on the latest payslip, the customer should wait until the next payslip is available before applying.

We are unable to accept a letter from the employer with the expected or confirmed date of return to work.

• Payslips must show the applicant and employer name, pay date, basic income, gross & net pay and any additional payments being used in affordability
• We will require contact details for the employer so we can request the reference directly from them and this must be returned directly to us.
• We will provide a form the employer can complete and return with their company headed paper, or they can provide a response in their own format as long as all the requested information is included: employer name and address; the employee’s name; employee's start date, contract status and income details (basic salary and any other income elements). The reference must be addressed to the Halifax and quote our reference number. The reference must be signed and dated, and the name and position of the person completing the reference must be provided. Any alterations must be clearly marked and initialled.
• The number of payslips requested applies whether the customer is paid weekly or monthly
• Hand written payslips are acceptable, but only where the corresponding bank statements are also provided to confirm the income paid by the employer
• Bank statements must show the customer's full name or initial and surname and account number
• Internet bank statements must show bank heading/name and http address
• Benefit Award Letters must be dated within last 12 months and show the applicant name and monetary value of the allowance. The benefit must not be received on behalf of another person, e.g. a dependant.

The maximum age at the end of the mortgage term is 80 years for all lending.

Future retirement income will need to be verified where the customer is taking a mortgage term which extends beyond their anticipated retirement age or a maximum working age, for which we will use 70, whichever is the earliest. Affordability will be assessed on the future retirement income. On occasions, a further review will be required to confirm we feel it is appropriate for the customer to lend into retirement.

The applicant's plans should be discussed in view of their occupation, and reasonability of working beyond state pension age should be documented where appropriate.

The types of evidence which can be used to verify anticipated retirement income are as follows:

• Private / Company Pension Forecast Statement dated within the last 18 months
• State Pension Statement dated within last 18 months which must be obtained by the customer directly as an actual statement with their name and address on it (this can be obtained from The Pension Service).
• State Pension Forecast statement issued to the customer directly from The Pension Service with their name and address on it.
• Annuity Statement dated within the last 18 months

The types of evidence which can be used to verify Pension Income already being received are as follows:

For State Pension, War Pension and Widows Pension

• Latest 1 month bank statement

For Company or Private Pension

One of the following:

• Latest payslip
• Latest bank statement
• Latest pension statement dated within last 12 months

• Employed - Current employment details collected
• Self Employed - 2 years history requested however, where the business has been trading for less than 2 years eg 1 year self employed and so self employed income is not available for 2 years, we will still consider these applications. You must record all full relevant years' income accurately on the mortgage application.

All mortgage commitments should be keyed as commitments with ‘Buy To Let' selected as mortgage type and the gross rental income keyed under Other income ‘Rental Income – from Buy to Let properties owned'.

The Rental income will be used to offset the BTL mortgage payments but will be not used within the affordability calculation itself.

Where the property is already let

Rental income can be evidenced by any of the following documents:

• Latest 3 months consecutive bank statements (showing rental income). (Internet bank statements can be used providing the date, customer name, account number and bank heading is clearly displayed)
• Tenancy agreement (current agreement required, in date and must be signed by both tenants and landlord/letting agent)
• Letter from accountant or solicitor
• Letter from letting agent - Statements of Account are not acceptable, and the letter should be on company headed paper and confirm;
  1. The customer's name
  2. The rental income amount, frequency of payment, and that the income is still being received
  3. The address of the rental property
  4. Signed and dated
• Internet bank statements can be used providing the date, customer name, account number and bank heading is clearly displayed
• If the Buy to Let is mortgaged, or being mortgaged with Lloyds Banking Group, a valuation report on file less than 6 months old can be used to show expected rental income.

If the property is to be let rental income can be evidenced by any of the following documents:

• Letter from the letting agent confirming the expected rental payment
• Letter from accountant or solicitor

We cannot accept rental income if the property is let to family or friends

Unencumbered Properties Only

Rental income can be used in affordability calculations if:

• There are no mortgages secured on any let properties, all properties must be unencumbered
• Your customer is declaring the income to the Inland Revenue and can evidence the rental income received by way of Tax Assessments and corresponding Tax Year Overviews
• The net profit declared from the rental properties should be treated as Self Employed income and keyed as a second job

The Self Employed income must be completed for each of the last 2 years as applicable.

In cases where the customer has more than one job, we will consider the following when deciding whether or not to take the secondary income into account. Hours worked, are they sustainable? Are the roles/skills similar? What is the distance between the jobs and the customers home? How long has the customer been in both jobs? Is the salary consistent with the type of employment? And the number of days the customer works per week.

Once all of the above has been taken into account and deemed acceptable, we will use the appropriate percentage of the second job income and it will be treated as per the standard income policy.

If any of the following applies, the customer must be keyed as self employed;

• Where the customer has a shareholding of 25% or more
• If joint customers own 25% or more between them, treat both customers as self-employed (both applicants need to hold a % share)
• A sub-contractor who derives income from more than one contract
• A customer has a partnership interest in a business, i.e. income is not PAYE, irrespective of the percentage shareholding
• A customer owns a franchise
• A customer employed by a Private Limited Company (LTD) who receives a salary (PAYE) and dividends as part of their remuneration package
• A customer who is in a Limited Liability Partnership (LLP) and receives a share of Net Profits

For applicants who are classed as self-employed, you should capture all of their income under the field "Net Profit". Whilst some self-employed income we allow is not truly 'net profit', we use this field in our affordability assessment and in our policy rules. The Net profit field should be completed as following:

• Limited company key total of salary/remuneration + dividends drawn (as shown on Tax Calculation)
• Partnership (or LLP) key profit share (percentage of) Sole trader key net profits
• Sole trader key net profits

We require self employed income details to be entered for the latest 2 years trading. Figures should only be entered for each full year of trading. Where the customer has been trading for less than 2 years but for at least one full year the application can be considered and accounts are then our preferred method of income verification. Additional information may be required to support any application.

We will accept self employed incomes which include government Self Employed Income Support Scheme (SEISS) grant income.

The income level used in our affordability calculation will be:

• Where the income in the ‘previous year’ is up to £50,000 the income used in affordability will be the lower of the last 2 year’s income figures.
• Where the income in the ‘previous year’ is above £50,000 the income used in affordability will be the lower of the latest year or the average of the last 2 years.

Latest year: £60,000

Previous year: £40,000

Income to be used in affordability = £40,000 (income in previous year is below £50,000 so use lower of the last 2 year’s income figures)

Latest year: £60,000

Previous year: £55,000

Income to be used in affordability = £57,500 (income in previous year is above £50,000 so use lower of the latest year or average of the last 2 years i.e. will use average).

A maximum LTI of 4.49x will apply on an application where there is any element of self employed income.

Acceptable Income Verification Documents

Latest 2 Years HM Revenue & Customs (HMRC) Tax Calculation accompanied by corresponding Tax Year Overviews –The year the Tax Calculation relates to and the Customer's name/initials must show. Tax Calculations can be obtained from the customer's online self-assessment account.

The following details must be visible on the online Tax Calculation:

• HMRC logo
• Unique Tax Reference (UTR)
• Customer's name
• Tax year (most recent no older than 18 months old), and the following wording:
  • "This is a copy of information held on your official online SA tax account with HMRC", and
  • "Submission is 100% complete."

Online tax assessments produced by accountants' commercial software (accompanied by corresponding Tax Year Overviews) are acceptable provided they show the following:

• Unique Tax Reference number
• Customer's name
• Tax Year (most recent no older than 18 months old).

The tax due figure on the Tax Calculation and Tax Year Overview will usually exactly match. If there is a difference in the tax figure we will consider these but may require updated documents.

Latest 2 Years Full Accounts – must be finalised and clearly show the net profit (for Sole Traders), share of net profit (for Partnerships) or salary & dividends (for Directors of Limited companies). Profit & Loss statements alone are not acceptable. Where the customer has been trading for less than 2 years, we require accounts for the full year of trading.

The year end on all documentation must be the most recent and must not be dated more than 18 months before the date of application.

In addition for self-employed incomes the latest 3 months' bank statements for the account which is used for business purposes may be required.

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.

The Credit History question should be answered as ‘Yes' if any customer has had a Bankruptcy / IVA / Debt Management Arrangement or Debt Relief Order which was:

Registered within the last 6yrs (whether now completed or not)

Or

Is still outstanding (whenever this was registered)

If a Bankruptcy / IVA / Debt Management Arrangement or Debt Relief Order was registered over 6yrs ago and is no long outstanding, the question can be answered as ‘No'

Concessionary purchases can only be agreed for subsequent sales (not new build) in the following circumstances:

The property purchase is solely for the applicant(s) to live in as their main residence and the applicant is:

• Purchasing from an immediate family member* at a discounted price (minimum of 10% discount is required) and the vendor must move out on completion

OR

• A sitting tenant purchasing from their landlord (private or council) at a discounted price (minimum of 10% discount is required). This excludes Right to Buy.

NB: To qualify, the tenant must have been subject to a tenancy agreement on the property for a minimum of 1 year

* The only relationships permitted for a concessionary purchase are:

• Parents, step parents, adoptive parents
• Applicant's children, step children, half children, adopted children
• Brothers and sisters, half brothers and sisters, step brothers and sisters
• Grandparents, step grandparents
• Grandchild, step grandchild
• Aunt/Uncle.

All family purchase transactions must provide vacant possession (the vendor must be moving out) on completion. In all cases the discount on the purchase price must be a minimum of 10% of the market value and must be a genuine discount (must not be subject to any future repayment, clawback or retained interest terms).

For inherited properties where a beneficiary is purchasing the other beneficiaries share, this should be keyed as a concessionary purchase. The purchase price will be the amount required to buy out the other beneficiaries.

Example: Mr Smith has died leaving the property valued at £200,000 to his two sons; therefore each beneficiary has a share of £100,000. Only one son wants the property and wishes to buy out the brother's shares. In this scenario, the purchase price would be £100,000 as the applicant already owns 50% of the property.

A valuation must be instructed in all cases including properties in Scotland (retypes are not permitted).

Note: As the application results can differ on these cases once the correct purchase price has been keyed, you must contact The Halifax Intermediary Processing Team for all applications for Concessionary Purchase. This will ensure correct underwriting of the case has been carried out at the time of application.

The Credit History question should be answered as ‘Yes' if any customer has had a County Court Judgement (CCJ) or default registered against them, or if self employed against their business, within the last 6 years. CCJs are generally taken into account in credit scoring however background details are required.

Credit Score Decline - Appeals

All applications will be credit scored. If an application is declined as it has not passed the credit score customers have a right to appeal and whilst we'll always reconsider carefully, without new information it is very unlikely that we will be able to change our decision.

This also applies where an application is declined on policy because of ‘the level of unsecured debt outstanding' or because ‘an active pay day loan is present'.

Please give careful consideration before submitting an appeal for assessment. The list below provides guidance on the scenarios in which an appeal may be successful:

Existing Halifax Mortgage Customers

Moving house with no increase in loan amount or loan to value (LTV) compared with the current mortgage.

BFPO Address

The client is in the British Armed Forces and living at a BFPO address.

Victim of Fraud

The fraud has been reported to the Police and Credit Industry Fraud Avoidance system (CIFAS) and can be evidenced by a crime reference number.

Adverse Credit Data Registered in Error

An error by Lloyds Banking Group can be evidenced.

If the adverse information has been registered on a non-Lloyds Banking Group product an appeal cannot be submitted and the customer should arrange for their records to be corrected before a new application is submitted.

For scenarios that fall outside of this list it is likely the final decision will remain unchanged.

Please refer to our Credit Scoring leaflet.

Further Advances

Please give careful consideration before submitting an appeal for assessment, the list above provides guidance on the scenarios in which an appeal may be successful.

We may still be able to consider an application required to complete essential repairs to the property – please contact us.

A dependant is anyone who is financially reliant on your customer, who is not a party to the mortgage and does not contribute to the mortgage payments. A dependant may be a child, spouse not party to the mortgage, adult or elderly relative or a future dependant.

You need to capture separately both Child and Adult Dependants.

Child Dependant

A child dependant would include any children for which the customer(s) is the primary carer and who is under 18. A child dependant would include a future dependant where the customer is expecting a baby or is in the process of adopting a child. Foster children do not need to be keyed as dependants.

Where any children have income and can fully support themselves they do not need to be keyed as a dependant.

If a child is not living with the customer(s) and maintenance is being paid, a dependant does not need to be keyed, but the maintenance amount must be keyed as a commitment.

Adult Dependant

An adult dependant is someone who is not party to the mortgage but is financially reliant on the customer. This could be a spouse/partner, elderly relative or grown up children who are unemployed or in full time education.

Where the adult dependant resides at the property for some of the time, you would key this in the adult dependant field.

Alternatively, where the customer financially supports an adult dependant who doesn't reside at the property, they would not be keyed as a dependant, but the related costs instead must be keyed as a total figure in “Other Commitments”.

All customers must make a minimum personal deposit for the property relevant to their individual credit score, product or scheme. No element of this deposit should be represented by a personal loan.

Where evidence of deposit is requested, the following documents are acceptable:

Gift from family

You should obtain a letter written by the family member that includes all of the following:

• Addressed to Halifax
• Dated within the last three months
• Name and address of the person(s) gifting the deposit
• Name and address of the applicant(s)
• The relationship between the person(s) making the gift and the applicant(s). They must be a family member. See definition of family member below
• The property address being purchased
• The amount of the deposit being gifted
• The source of the gifted deposit e.g. savings
• The gift is ‘not repayable' and the person(s) gifting the deposit 'will hold no interest in the property following completion of the mortgage'
• Signed by the person(s) gifting the deposit

A Gifted Deposit template letter is available for you to use in the Literature page.

You should also provide a UK bank statement or UK passbook from the family member or applicants showing the deposit funds in their account. Alternatively, the family member or applicant may provide a letter from their UK bank confirming that the funds are available. Additional statements may be requested where required.

If any of the deposit is gifted, this should be chosen as the source of deposit when keying the application.

The definition of a family member is someone who is related to at least one of the applicants:

• by birth/blood relative (for example an Aunty has to be via blood and not marriage)
• by marriage or civil partnership (including step children, adopted children and in-laws)
• as 'Common Law' partners or co-habitees.

Savings

You should obtain:

• The latest three months' UK bank statements or a UK passbook covering the latest three months' transactions showing the applicant's name, account details (sort code and account number for bank statements or account number for passbooks) and company name, or the latest annual statement for longer term savings plans
• The statements or passbook should be in the name of at least one of the applicants
• The latest closing balance must cover the total deposit required
• Any recent large or unusual deposit may require clarification to establish the source
• Where funds have originated from a Business account, you should obtain confirmation from the accountant that the withdrawal will not have a negative impact on the business.

Forces Help to Buy (previously called Long Service Advance of pay)

Serving members of HM Forces may be able to raise capital for a deposit by means of a 'Forces Help to Buy' (FHTB) interest free loan which will be repaid by the customer through their pay.

This can be accepted as a deposit for a mortgage on a main residence or when using the Help to Buy Equity Loan scheme and the repayment must be keyed as a commitment.

FHTBs are repayable interest free over 10 years so to calculate the monthly payment, divide the amount borrowed under the FHTB scheme by 120.

Where the deposit is funded from FHTB, the deposit type should be keyed as savings. The applicant will not receive confirmation of the FHTB amount from HM Forces until they have received their mortgage offer, so there is no requirement to obtain evidence.

Concessionary

If the deposit is from equity (e.g. a reduced purchase price) the application should be treated as a concessionary purchase - refer to CONCESSIONARY PURCHASE FOR CRITERIA.

Vendor Deposits and Cashbacks (Non New Build Properties)

Vendor Gifted Deposits are an unacceptable source of deposit for any non new build property.

This does not impact buyers who are receiving gifted deposits to purchase New Build Properties or concessionary purchases.

We do not currently accept new business applications from ExPat residents.

To qualify for a FTB product, one applicant must not have previously had a mortgage or purchased a property (including bought for cash) either in the UK or abroad. In instances where an applicant has owned (such as inherited) but not previously bought a property they are classified as a FTB. For joint applicants, only one applicant needs to be a FTB to qualify for a FTB product.

All loans arranged where the capital element is not included in the monthly payment, including those that are part capital and interest repayment, part interest only, must have a plan in place to repay the capital at the end of the term. This includes new loans, further advances and product transfers.

As a responsible lender, it is important for us to see evidence of the repayment plan for interest only mortgages so documents relating to the repayment plan must be received before a new mortgage offer can be considered.

The repayment plan must cover the whole amount of interest only. This information is only a guide. A mortgage offer will only be issued once we have confirmed that the evidence supplied meets our criteria.

Bonus

There is a minimum income requirement for this repayment plan to be available:

• Sole applicant with an income of £100,000 or more
• Joint applicants where one applicant has an income of £100,000 or more, or where the combined income of both applicants is £150,000 or more. e.g. this could be £80K and £70K, therefore no applicant has an income of £100,000 or more but together their income is £150,000 or more
• The income requirement is calculated on the total of Basic, Overtime, Bonus and Commission for employed applicants or the latest year's income for self-employed customers.

The amount of this repayment vehicle which can be used is assessed by:

• An annual bonus figure is calculated from the payslips provided as evidence
• Where bonus is paid annually the average of the bonus received in the last 2 years is used
• 30% of this bonus figure is then multiplied by the term of the mortgage required for the amount of Interest Only lending available
• There is an expectation that the customer will make periodic lump sum repayments to reduce the amount outstanding during their Interest Only mortgage and it is important the customer understands this, however Early Repayment Charges would apply as normal where any overpayment concession is exceeded
• Where any Bonus is to be used as a repayment plan no bonus income earned by any customer will be used in the affordability assessment
• Lending Into Retirement - the term of any Interest Only lending must not exceed the lower of the Anticipated Retirement Age or Maximum Working Age where Bonus is being used as a Repayment Plan. The term can run up to 364 days past the lower of the ARA / MWA.

Evidence of bonus income is required:

• If received monthly the latest 3 payslips. If received quarterly, the latest 4 bonus payslips
• If received half yearly then previous 2 payslips showing bonus payment
• If received annually then previous 2 years payslips showing bonus payment
• An average value should be calculated and used
• Bonus slip must show applicant & employer name, pay date and gross bonus amount.

Cash

There is a minimum income requirement for this repayment plan to be available:

• Sole applicant with an income of £100,000 or more
• Joint applicants where one applicant has an income of £100,000 or more, or where the combined income of both applicants is £150,000 or more. e.g. this could be £80K and £70K, therefore no applicant has an income of £100,000 or more but together their income is £150,000 or more
• The income requirement is calculated on the total of Basic, Overtime, Bonus and Commission for employed applicants or the latest year's income for self-employed customers.

The amount of this repayment vehicle which can be used is assessed by:

• Copy of statement dated within last month and a previous statement showing Cash amount held for a minimum of 3 consecutive months
• If a minimum £50,000 has been held in a savings or current account (£ sterling) for a minimum 3 consecutive months 100% of the current cash balance can be used to support Interest Only lending
• If the statements show a fluctuating cash balance then the lowest balance will be used
• If savings are also being used as source of deposit then evidence of an amount sufficient for both the repayment plan and deposit must be provided
• Lending Into Retirement – the term of any Interest Only lending must not exceed the Maximum Working Age where Cash is being used as a Repayment Plan.

Endowment

There is a minimum income requirement for this repayment plan to be available:

• Sole or joint applicants have a combined income of £50,000 or more
• The income requirement is calculated on the total of Basic, Overtime, Bonus and Commission for employed applicants or the latest year's income for self-employed customers.

The amount of this repayment vehicle which can be used is assessed by:

• Copy of latest projection statement dated within last 12 months
• Endowment companies will present three growth rates to a customer with the middle one (for example 6%) being the most likely projected outcome. We allow up to 100% of projected amount using the middle % figure.

Pension

There is a minimum income requirement for this repayment plan to be available:

• Sole or joint applicants have a combined income of £50,000 or more
• The income requirement is calculated on the total of Basic, Overtime, Bonus and Commission for employed applicants or the latest year's income for self-employed customers.

The amount of this repayment vehicle which can be used is assessed by:

• Copy of latest pension statement dated within the last 12 months
• The pension must have a minimum projected total fund value of £400,000 of which a maximum 15% of this amount will be used to support Interest Only lending
• Where a projected total fund value does not show on the pension statement e.g. on a final salary pension if the projected lump sum is at least £100,000 up to 60% of a projected lump sum value can be used
• Where a statement gives a range of projected values the middle of three figures or the lower of two would be used
• Pensions belonging to the same person can be combined to reach the £400,000 or £100,000 levels but pensions held by joint applicants cannot be combined to meet these levels
• Pension contributions should be collected under ‘Total monthly payment towards Investment Vehicles' and will be used within affordability calculations
• It is important the customer understands the need to maintain the pension contributions
• Lending Into Retirement - the term of any Interest Only lending must not exceed the lower of the Anticipated Retirement Age or Maximum Working Age where Pension is being used as a Repayment Plan. The term can run up to 364 days past the lower of the ARA / MWA.

Sale of mortgaged property

There is a minimum income requirement for this repayment plan to be available:

• Sole applicant with an income of £100,000 or more
• Joint applicants where one applicant has an income of £100,000 or more, or where the combined income of both applicants is £150,000 or more. e.g. this could be £80K and £70K, therefore no applicant has an income of £100,000 or more but together their income is £150,000 or more
• The income requirement is calculated on the total of Basic, Overtime, Bonus and Commission for employed applicants or the latest year's income for self-employed customers

There is a minimum credit score requirement for this repayment plan to be available. If applications do not meet this an alternative repayment plan would need to be selected.

The amount of this repayment vehicle which can be used is assessed by:

• The equity amount available in the property being mortgaged can be used to support Interest Only lending
• This will be calculated using the valuation/property assessment carried out as part of the application and any existing or new additional borrowing elsewhere to be secured against the property must be declared and will reduce the equity amount available
• If the property is to be a main residence there must be a minimum equity amount available at application of £300,000
• The maximum Loan To Value (LTV) that can be on Interest Only is 50%; this means any borrowing above 50% LTV must be on a Capital & Interest Repayment basis up to the normal maximum lending where any element is Interest Only of 75% LTV
• The term on any Capital & Interest Repayment element cannot exceed the term on Interest Only
• If the property is on the ‘second home' scheme the £300,000 minimum equity requirement does not apply and a maximum LTV of 75% can be on Interest Only
• It is important the customer understands the requirement to sell their property at the end of the term to repay the Interest Only loan amount
• Lending Into Retirement – the term of any Interest Only lending must not exceed the Maximum Working Age where Sale of Mortgage Property is being used as a Repayment Plan (except where property is ‘second home' where a longer term may be considered).

Sale of other residential property

There is a minimum income requirement for this repayment plan to be available:

• Sole or joint applicants have a combined income of £50,000 or more
• The income requirement is calculated on the total of Basic, Overtime, Bonus and Commission for employed applicants or the latest year's income for self-employed customers.

The amount of this repayment vehicle which can be used is assessed by:

• 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 check the ownership of the other residential property and assess its value using an automated valuation (AVM). (Ownership of the other residential property must be in the same name as the applicants)
• We will compare the equity available in the property with the amount of interest only lending required
• Current equity within the property must be over £50,000
• We will use 80% of the current equity value of the property to support interest only lending
• If the valuation fails to sufficiently value the other property the customer could obtain a full valuation of the property (at their own cost) using a RICS certified surveyor
• Please note that there is a minimum greater than £50,000 equity requirement for each individual property being used to support Interest Only lending
• If the property is not already purchased, evidence required will also include; property details, Acting Solicitor to confirm intended ownership of the second property, details of any loans to be secured against this property (property valuation and land registry search carried out by us if needed). We will confirm the intended ownership of the second property prior to offer on the new mortgage / further advance.

Stocks and Shares (including ISA) and other investments

There is a minimum income requirement for this repayment plan to be available:

• Sole or joint applicants have a combined income of £50,000 or more
• The income requirement is calculated on the total of Basic, Overtime, Bonus and Commission for employed applicants or the latest year's income for self-employed customers.

The amount of this repayment vehicle which can be used is assessed by:

• Only UK based investments quoted within the FTSE index held in sterling are acceptable
• Unit trusts / Open Ended Investment Companies / Investment Bonds (UK) allowed
• Copy of share certificates, nominee account statement or confirmation from a recognised stock broker containing evidence of share holdings together with their valuation
• Copy of latest ISA statement dated within last 12 months
• The amount of interest only cover available will be 80% of the current value of the investment which must be greater than £50,000
• The total can be made up of a combination of Stocks and Shares ISA, Unit Trusts, Investment Bonds and Stocks and Shares.

Important points on the assessment:

• We are not providing advice on your customer'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 customer 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 customer to provide evidence of their repayment plan(s). If your customer 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 customer to transfer some or all of their mortgage onto a capital and interest repayment basis.
• Please remember it is your customer'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 customer 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 other commercial property.
  • Sale of non property assets.
  • Inheritance.
• Maturity dates will be requested for each applicable repayment plan
• The mortgage term must finish before a maximum age of 70 years rather than 80 years for repayment mortgages. For pension and bonus repayment plan types the maximum term would be restricted further if there was a lower anticipated retirement age.

Only repayment vehicles for those customers intending to live at the mortgaged property may be used to support the loan. E.G. if a parent is named on the mortgage to help with affordability then a property in the parents name cannot be accepted as a repayment vehicle.

Existing Halifax mortgage customers moving home

If an existing customer does not meet the current interest only rules we may consider allowing interest only on the new mortgage up to the level held currently, provided the mortgage term is not increasing. Please refer to your BDM for guidance.

See below for variations to the limits set within this table

• The maximum loan on an interest only basis is 75%.
• The maximum loan for standard new build 85%.
• The maximum loan on converted or refurbished properties where the vendor is a builder/developer and the property has been vacated to allow the refurbishment to be undertaken is 80%.
• The maximum loan on remortgages without additional borrowing is 90%.
• The maximum loan on remortgages with additional borrowing is 85%.
• The maximum Loan to Value loan on remortgages of Mortgage Free (Unencumbered) properties is 85%.
• For house purchase and remortgage where the total LTV is over 75% all borrowing must be on a repayment basis.
• Customer taking out a loan above 75% at application stage cannot transfer from repayment to interest only, within the first 12 months of completion of the mortgage.
• New build applications are subject to a limit of 75% LTV for interest only and 85% LTV for repayment.
• Further advance applications are subject to a limit of 75% LTV for interest only and 85% LTV for repayment.
  
  • Further advance applications will not be permitted within 6 months of completion of the original mortgage.
  • Further advance is subject to a minimum loan of £10,000.
• The repayment plan Sale of Mortgaged Property is limited to a maximum LTV of 50% on interest only.
• Within these lending limits we calculate the loan available using a comprehensive affordability assessment. There are also Loan to Income (LTI) caps that will apply and may impact the maximum loan. See Affordability and Sustainability for further details

• No more than two lodgers are acceptable providing that they are treated as a family member, i.e. sharing living accommodation
• We do not lend using any income provided by lodger(s)
• If a lodger(s) have exclusive occupation of a self-contained part of the house (e.g. an annex) or your customer does not intend to occupy the property on a permanent basis, this will require further checks as the lodger(s) may acquire legal rights

40 years at time of application

• Minimum age 18 years.
• Maximum retirement, unless retirement income meets affordability rules.

The maximum age at the end of the mortgage term is 80 years for all repayment mortgages and 70 if any part of the mortgage is on an interest only basis.

The Credit History question should be answered as ‘Yes' if any customer has been in arrears in the last 6 years with any borrowing or ever had a property repossessed. Applications where previous mortgages have been in arrears will be considered on an individual basis.

Loans on mortgage free properties are treated as remortgages. The customer is eligible for the remortgage products and incentives e.g. no cost for property assessment and free legal service.

The maximum Loan to Value on Mortgage Free (Unencumbered) properties is 85%.

How to key

To ensure that loans on mortgage free properties are processed correctly, the case should be keyed as follows:

1. Select ‘Remortgage' or ‘Remortgage – Own Conveyancer' as appropriate in the dropdown list for Purchase type.
2. Answer ‘Is the property to be mortgaged, mortgage free?' as ‘Yes' for all applicants.

Note: The property must have been registered in the applicant's name (or at least one of the applicants' names) for a minimum of six months.

Halifax Intermediaries is supporting the Government Mortgage Guarantee Scheme for purchase mortgage applications over 90% loan to value (LTV).

The 'Homebuyer Special' scheme must be selected when keying an application on Halifax Intermediaries Online.

The following criteria applies:

• First time buyers and home movers
• Purchase applications only, no remortgages
• Maximum loan amount of £570,000
• Available for loans >90% up to 95% LTV ; product fees cannot be added above 95%
• Minimum 5% personal deposit is required
• This must be the customers only residence and they must not have an interest in any other properties such as a second home or buy to let
• New build properties are not included
• No other 'schemes' can be selected (shared equity, shared ownership, right to buy not acceptable)
• An enhanced credit score requirement will be applied to any applications on this scheme
• A maximum 4.49x loan to income (LTI) cap will be applied as part of our affordability assessment
• Current credit commitments will be deducted as ongoing in our affordability calculation even when declared as 'to be repaid' at or before completion. The loan amount must be affordable with these commitments deducted as remaining
• Lending into retirement is allowed subject to normal criteria

Customers classed as Mortgage Prisoners by the FCA due to their current mortgage being held with a closed book lender may be able to remortgage to the Halifax. Applications will be subject to our criteria, credit scoring and affordability assessment.

If a remortgage application passes our credit score but fails our affordability assessment we may still be able to consider the application. The customer must be remortgaging from a closed book lender and have received a letter from their existing lender stating they are classed as a Mortgage Prisoner. The remortgage application would need to meet the following criteria:

• A remortgage of the customer's main residence with no additional borrowing (excluding any fees).
• Maximum 75% loan to value (LTV).
• Interest Only lending is acceptable subject to verification of acceptable repayment plans for the whole amount of interest only per our normal criteria.
• The customer's new monthly payment must be no more than 5% higher than the current monthly payment.
• The mortgage cannot be on a Shared Equity or Shared Ownership scheme.
• The customer must not be in Financial Difficulty. Please see the definition of ‘Financial Difficulty'.

If an Alternative Lending Proposal (ALP) application result is received this indicates the application has passed our credit score but failed the affordability assessment. If all of the above criteria are met please select the ‘Mortgage Prisoner' scheme in Halifax Intermediaries Online and submit the full application. You should complete and upload the Mortgage Prisoner form and all required documentation.

Even if the above criteria are met the level of credit score achieved will be considered and the application will still be subject to a full review before we can confirm if we are able to proceed.

It is important the customer has checked if there are any other financial interests registered against the property (for example if there is a second charge or charging order) and if so that these will either be removed or postponed so that Halifax has a first charge. In many cases due to the nature of the interest it will be clear from the outset that postponement is not possible and it will be necessary for the debt to the third party to be repaid on or before completion. If it becomes apparent that the Halifax mortgage cannot be registered as a first charge because of any third party interest in the property the new mortgage will not be able to proceed.

• Maximum of four applicants
• Two incomes are taken into account for affordability.
• For Bonus/Cash/Sale Of Mortgage Property repayment plans, only the income from the first two applicants will be used to determine the income qualifying criteria.

Simultaneous sale and purchase is the preferred route, but we recognise that this is not always possible.

Existing property is for sale but will not be sold before new mortgage completes - The existing mortgage payment must be keyed as a credit commitment and will be included in the affordability calculation.

Existing property to be rented out - The mortgage payment must be keyed as a credit commitment (the mortgage type for the commitment needs to by keyed as ‘Buy to Let'). The rent received should be keyed as 'Rental Income (if rental property)'.

Other Buy-to-Let mortgaged properties owned - The mortgages must be keyed as individual credit commitments and the total rent received keyed as 'Rental Income (if rental property).

You must ensure your customer(s) have owned their property for at least six months before submitting a remortgage application. Maximum LTV for remortgages without capital raising/additional borrowing is 90%. The maximum LTV for remortgages with any capital raising/additional borrowing is 85%, including remortgages of unencumbered (mortgage free) properties. (Maximum LTVs are subject to product availability or unless stated otherwise).

The following reasons for capital raising are acceptable:

• Home improvements
• Debt consolidation
• To gift to relative – e.g. to give to a family member towards the deposit for a property purchase. NB – on a new mortgage application where the deposit has been gifted confirmation may be required that the gift is 'not repayable' and the person(s) gifting the deposit 'will hold no interest in the property following completion of the mortgage'
• Deposit for purchase of another property, or outright purchase – second home or buy to let
• To add/remove a party to the mortgage e.g. buying out joint applicant who is leaving property and to be removed from mortgage
• Purchase consumer goods, weddings, holidays
• Buy additional land adjacent to property
• Purchase freehold/lease extension
• Purchase additional share/final tranche on shared ownership scheme
• Repay part/all of equity loan on shared equity scheme
• Repay a second/subsequent charge
• Investment purposes – however speculative purposes including high risk investments e.g. purchase of shares and gambling etc. are not acceptable
• Payment of fees/early repayment charges with existing lender.

The reasons for capital raising which are not acceptable:

• Business purposes/cash injection into a business:
  • Self employed customers wishing to pay business debts, overdrafts, tax bills etc.
  • Any funds being raised for use in any way towards a current or new business venture including buying out a business partner or using money to invest in assets for a business (i.e. machinery/vehicles or stock) is not permitted, except where lending to a professional to purchase an equity share to become a partner in a new or existing business, which is considered as a loan for personal purposes and is acceptable ; the customer should be for example an accountant, barrister, dentist, doctor, pharmacist, solicitor, teacher or veterinarian.
• Bridging finance
• Purchase of timeshare.

Where the capital raising is towards the purchase of another property we do not require details of that property but any associated finance e.g. mortgages to be taken must be declared as credit commitments.

It is acceptable to capital raise on a property under the ‘second home loan' scheme up to normal maximum 75% LTV for that scheme.

Shared equity schemes - the only acceptable reasons for capital raising on this scheme are repayment of part of equity loan, purchase lease extension, purchase freehold, home improvements and removing/adding a party to the mortgage. We do not allow remortgage applications where there is any element of debt consolidation. It is acceptable to capital raise on a remortgage to repay the full equity loan; the application would not be processed under the shared equity scheme.

Shared ownership schemes - the only acceptable reasons for capital raising on this scheme are purchase of intermediate share, home improvements and removing/adding a party to the mortgage. The consent of the Housing Association would be required for any capital raising. We do not allow remortgage applications where there is any element of debt consolidation. It is acceptable to capital raise to purchase the final share of the property ; the application would not be processed under the shared ownership scheme.

Please see our Further Advance section for the list of acceptable reasons for a Further Advance on existing mortgages.

The surveyor will advise when an External Wall System (EWS1) form is required to confirm the status of the external wall system and any applicable attachments e.g. balconies on multi occupied, multi storey buildings of any height.

It is the responsibility of the building owner and/or its agent (in Scotland individual customers have to source the EWS1 form) as the responsible person to:

• Confirm that an external wall system (EWS) or attachments, such as a balcony, on buildings containing flats has been assessed by a suitable expert for likelihood of proportionate remediation to address fire safety risk.
• The EWS1 form must be prepared by a suitably qualified independent professional advisor.
• Professional advisor must be a member of one of the professional bodies as listed by the RICS - List of professional bodies.

We will be unable to confirm if a property is acceptable until a valuation has been instructed.

For purchase cases a special condition will be added to a mortgage offer to instruct the conveyancer to advise the customer that the offer has been made on the reliance of an EWS1. It will also ensure that the customer knows that neither ourselves or surveying providers are liable for the information that was contained in the EWS1 form.

New Build

For New Build high rise blocks over 6 storeys/18m in height (England and Wales) or 4 storeys/11m in height (Scotland) Building Regulation compliance, The Building (Amendment) Regulations 2018 or local equivalent can be relied on, subject to the conveyancer receiving confirmation of this from the building owner, and/or its agent or duty holder. Where this cannot be obtained the above criteria applies.

The property must meet minimum criteria. Must be habitable, readily saleable, structurally sound and be able to have buildings insurance arranged upon it. The mortgage advance may be wholly or partially retained pending completion of works required to bring the property to a suitable condition for lending.

Property acceptability is based on a satisfactory valuation report from the bank's appointed valuer. Non-standard construction will be assessed on individual merit. Certain types of pre-cast reinforced concrete (PRC) construction are designated defective and may not be acceptable unless repaired.

Applications that involve a distressed sale or a sale and leaseback are not acceptable.

The Government First Homes scheme in England allows First Time Buyers (FTB) to purchase a New Build property at a discounted purchase price under a Resale Price Covenant (RPC). The discount (which will be a minimum 30%) must be passed on if the property is sold in the future.

Key eligibility criteria for First Homes scheme:

• All applicants must be a First Time Buyer. Local Authorities may prioritise key workers, local residents and service personnel
• In England only
• New Build properties only
• Maximum purchase price, after discount, is £250,000 (£420,000 in London)
• Discount typically 30% but Local Authorities can increase up to 50%
• Customer maximum income of £80,000 (£90,000 in London).

Mortgage criteria:

• Minimum 5% personal deposit based on discounted purchase price
• First Homes scheme specific products must be selected
• Mortgage must be on a capital and interest repayment basis, no interest only
• Minimum 50% Loan to Value (LTV) based on discounted purchased price.

Example:

• Full market valuation = £100,000
• Discount of 30% (but could be higher) = £30,000
• Discounted purchase price = £70,000
• Customer deposit required = £3,500 (5% of £70,000)
• Maximum Loan = £66,500
• LTV for product selection = 67% (£66,500 loan against £100,000 full market value).

A 5% personal deposit is required in addition to any incentives from the builder. The loan amount together with any incentives and any product fee being added, cannot exceed 95% of the discounted purchase price. For product selection the percentage LTV used will be loan amount against the full market value (not discounted purchase price).

On Halifax Intermediaries Online the 'First Homes' scheme should be selected on the Scheme screen and you will then be asked to key the percentage discount. On the Loan screen key the discounted purchase price.

The customer should obtain an Authority to Proceed (ATP) from the Local Authority. A Decision In Principle (DIP) can be keyed before ATP has been obtained by selecting the new scheme and a full application should only be submitted after ATP has been granted.

A Special Condition on the mortgage offer will state that an RPC will apply to the property. Affordable Housing Scheme Guidance Notes will be issued automatically to the conveyancer with the offer.

We continue to accept RPC schemes which are not part of the First Homes initiative. Please see Resale Price Covenant (RPC) criteria.

We will lend subject to the valuer confirming the property is suitable mortgage security and providing a present condition valuation figure. To assess the property the valuer will require a report outlining the issues and a quote from a treatment company who must either be a member of the Property Care Association or be able to offer a warranty backed treatment plan. If treatment is advised and where possible, then this is often over 3-4 years.

An initial occupancy/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 and includes converted and refurbished properties. These will fall into one of the following categories:

• Newly built property.
• Refurbished property i.e. refurbishment of an existing residential property, typically a re-furbished property will be considered as initial occupancy where the vendor is a builder/developer and the property has been vacated to allow for the refurbishment to be undertaken.
• Newly converted property i.e. conversion of an existing non residential property, e.g. an existing mill converted into flats.
• A property, either new or converted (as above), that has been tenanted and is now offered for sale by the builder/developer.
• Property must be subject to one of the following building control and monitoring requirements:
  • Building Standards Indemnity Scheme from a warranty provider accepted by Lloyds Banking Group (see below for acceptable warranty providers)
  • Professional consultant where small, solely residential development of no more than 15 units – consultant must meet qualifying criteria
  • An acceptable guarantee from a development corporation or local authority where they are the vendor.
• A final inspection is required to confirm completion of the new property unless covered by an acceptable new build warranty provider.
• Barn conversions / converted properties are subject to a full retention pending completion of works and subject to new build criteria.

Maximum LTV on new build properties (houses and flats) is 85%, or:

• 75% if the scheme type is a second home loan or buy to let
• 80% if a converted or refurbished property where the vendor is a builder/developer and the property has been vacated to allow the refurbishment to be undertaken.

Builder cash incentives include but are not limited to deposit contributions, cash-backs, contribution 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 the point of sale.

Cash incentives for shared equity applications are acceptable provided the total value of the loan plus incentive together does not exceed 95% of the value of the equity share being purchased.

All lending decisions are based on valuation or purchase price (whichever is lower).

Acceptable Warranty Providers

• ABC+
• Advantage HCI
• Ark Insurance
• Build Assure
• Building LifePlans Ltd (BLP)
• Buildzone
• Checkmate
• FMB Insurance
• Global Home Warranties
• Homeproof (previously Aedis)
• International Construction Warranties (ICW)
• LABC Hallmark Scheme
• NHBC
• One Guarantee
• Premier Guarantee - includes the LABC New Homes Warranty and LABC Hallmark Scheme
• Protek
• Q Assure Build

Where an acceptable warranty provider is not shown on the drop-down list in the Halifax Intermediaries online system, ‘Other' should be selected.

Customers should contact Halifax on 0345 727 3747 in the first instance where they will be provided with details of how to progress their requirements.

The customer acquires a 100% ownership of the property at a discounted price and the seller does not retain any percentage or own a share of the property. The discounted purchase price is provided by way of the property being subject to a "Covenant", contained in the Section 106/75 planning agreement. This is a restriction to ensure that the "Discount" is always passed on to future buyers.

Discount Market Scheme (DMS) is another name for RPC.

We will only accept a scheme where the resale price is based upon a certain percentage of market value and not on a house price and/or income index.

Customers can sometimes buy out of the restriction however we do not require this as part of the scheme.

For the Government First homes scheme please see this page.

For all other RPC applications (excluding First Homes scheme):

• The 'Resale Price Covenant' scheme should be selected on the Scheme screen and you will then be asked to key the percentage discount. On the Loan screen key the discounted purchase price.
• A 10% personal deposit is required.
• Product should be selected from the Affordable Housing (SE/SO/RPC) range. For product selection the percentage loan to value (LTV) used will be loan amount against the discounted purchase price.
• Mortgage must be on a capital and interest repayment basis, no interest only.
• Normal maximum LTVs will apply for the purchase of New Build properties (based on loan amount against the discounted purchase price).
• A Special Condition on the mortgage offer will state that an RPC will apply to the property. Affordable Housing Scheme Guidance Notes will be issued automatically to the conveyancer with the offer.

Please also see the Affordable housing page and 'Section 106 planning agreements / restrictive covenants'.

If the purchase property address changes once a mortgage application has been made, and the customer's original mortgage product has been withdrawn, a new product from the current range must be selected.

If the property being purchased is not changing but an amendment is required to the address keyed e.g. property number or street name this must be amended by us prior to completion. You should contact us to make this change.

Loans may be accepted up to 100% of the discounted purchase price, provided that they do not exceed Halifax lending limits based on valuation.

Home improvements allowed - for funds to be released we require sight of invoices, alternatively a retention will be made at completion; funds will then be released on production of invoices.

It is the solicitor's responsibility to check that the Right to Buy Notice is in the same name(s) as the mortgage, and that the funds are being used for purchase or new home improvements only.

The market value figure will be used to determine the valuation fee and not the discounted purchase price.

Lets your customer apply for a mortgage on a property to be used primarily as a holiday or second home

• Maximum LTV of 75%.
• Within Lloyds Banking Group we will allow a maximum of 1 residential plus 5 ‘other' properties (across BTL and Second Home Loan) with a maximum portfolio value of £3m.
• We will not accept Right to Buy, Guarantor applications or Builders Incentive Schemes.
• Occasional letting is allowed up to a period of four months with special conditions placed on the mortgage. If the Second Home is for let for more than four months this will be treated as a Buy to Let.
• Income must cover all mortgage commitments and the additional expense of running second home properties.
• Applications where a tenancy agreement is in place between applicant and family member cannot be accepted - The mortgage can be used where a family member will occupy the property provided there is not a formal tenancy agreement.

• Intended to regulate development or proposed use of property
• Range is varied but may include:
  • Limiting occupation to a certain category of occupant - local residents, first time buyers, specified age requirement, specified employment types
  • Restricting use of property - tied to agricultural use, restricting residential occupation to certain time limits, for example, 10 months of the year.
• The impact on acceptability depends upon the impact of the restriction. There may be a strong local demand for the property from qualifying purchasers.
• Broadly restrictions that mean a property must be used for agricultural use will be unacceptable.
• The valuer will determine the impact on the suitability of the property for lending and the conveyancer will determine whether the purchaser / owner complies with the obligation, advising the bank if any issues that may impact the lending.
• Where the restriction limits the time a property can be occupied this will only be acceptable for holiday homes / second home loans and subject to the valuer confirming the property is suitable for lending.

Additional documentation required

• Schedule and cost of works to be provided by the supervising consultant/builder. This should include confirmation that any abnormal costs associated with the site and a contingency of not less than 10% has been factored into the costs.
• Full planning consent, planning authority approved plans and a plan outlining the boundaries of the proposed security and access to and from the development to the highway.
• Confirmation that appropriate insurance is in place during the construction of the property.

Additional self build criteria

All full applications will be referred to an underwriter for review.

Customers can only have one pending Self Build application with Lloyds Banking Group.

Product transfers, term and repayment type changes and Transfer of Mortgaged Property changes will not be allowed until the property build is complete.

Customers can apply for a Self Build mortgage on Interest Only where a suitable repayment vehicle is in place.

Existing Halifax customers cannot port their existing mortgage product on to a self build mortgage.

Product fees can be added to the loan amount.

LTV/Loan size

Loan to Value – Maximum of 75% of the final value of the property and the loan must not exceed the combined costs to buy the land and build the property.

Loan Size – up to £1million (£300,000 for first time buyers).

Stage payments – Funds can be released in a maximum of 5 instalments. We usually release the money at the end of the following 5 stages:

• Land Purchase
• Footings and Foundations
• Construction of the walls (Wall Plate Level)
• Roofed In
• Internal/Final Completion

The initial advance can be up to a maximum of 75% of the current value. Where funds are being released for land purchase it must also not exceed 75% of the price of the land paid by the applicant. Where all the land has been gifted the first instalment will not be released until footings and foundations stage has been reached.

When the construction reaches the appropriate stages, further releases up to 75% of the current value, less the total amount already released, can be considered. However, for the penultimate stage release, at least 10% of the total loan will be retained, as a final release, until the property is complete and we are in satisfactory receipt of the final completion certificate, irrespective of the ability to release more based on the interim value.

Security

Properties must be for main residential use only. Second properties, holiday homes or properties which will be let are not acceptable.

We only accept Detached Properties.

Refurbishments and conversions will not be accepted.

No usage or occupancy restrictions are permitted.

We will not accept situations where the land is being or has been separated from either:

• Surrounding/adjoining land which is in the ownership of the applicant or their family
• A commercial venture owned by the applicant or their family

No remortgages of properties already under construction.

No applications for properties under construction where the applicant is not the original owner.

Applications may be considered where the customer is acquiring land with an existing property already in situ which is being demolished to make way for a new property. Where this occurs, the supervising consultant/developer must reflect any clearance and/or abnormal costs associated with the demolition within the schedule of work and costs provided.

Where the customer is the original owner and has commenced the build, this may be considered provided the build is not further than footings/foundations level.

The building project must be managed by either a builder or an independent supervising consultant and they must meet our building control and monitoring requirements i.e an acceptable Buildings Standards Indemnity Scheme or meet the requirements for the self build to be 'Consultant Monitored'.

Conveyancer

For self build we will appoint our own conveyancer to act on behalf of the Bank and the customer will appoint a conveyancer to act on their behalf. This provides a higher level of security for both us and our customer for more complicated mortgage advances.

There are three firms of conveyancers who have been appointed to act for the Bank in these transactions and the appropriate conveyancer will be appointed based on property location:

• England & Wales – Enact Conveyancing Fax 0344 244 3376
• Scotland – Aberdein Considine Fax 01244 585043
• Northern Ireland – Wilson Nesbitt Fax 028 912 78199

The following should be noted:

• The customer will meet the cost of their conveyancer but we will meet the costs of the firm acting for the Bank.
• The customer must provide details of their conveyancer and be made aware that any offer made will be issued to the Bank's conveyancer and the customer's conveyancer will be contacted directly by the Bank's appointed firm.
• On the rare occasion that the customer chooses one of the firms of conveyancers who will also represent the Bank, the conveyancer will be able to act for both the customer and the Bank with the customer meeting the conveyancing costs of the whole transaction.
• The customer's conveyancer should not exchange contracts until authorised by the Bank's conveyancer to do so.

Lets your customer buy a home by sharing the equity with a third party.

• Halifax must have first charge. The seller secures their interest by way of a second charge.
• The following limits apply and the loan to full value of the property must not exceed normal lending limits:
  
  
  • The equity share being purchased must be between 25% and 90%.
  • The equity loan must be a minimum of 10%.
  • Customer must always provide a minimum personal deposit of 5% based on the purchase price of the whole property.
  • The mortgage must be a maximum of 85% LTV based on the purchase price of the whole property.
• Purchase price limits may differ depending on the scheme. For Help to Buy, the maximum property value varies by region. Please refer to the Government's scheme rules.
• The mortgage must be on a repayment basis. We do not allow any remortgage applications, where there is any element of debt consolidation.
• The term of the mortgage must be shorter than or equal to the equity loan term.
• We will apply an income multiple cap of four and a half times income on all affordable housing (shared equity and shared ownership) applications, including Help to Buy Equity Loans.
• Client must pay a 5% personal deposit (excluding any deposit provided by a builder or housing association). Cash incentives are acceptable provided the loan and cash incentive together do not exceed 95% of the value of the customer's equity share.

Example:

80/20 Shared Equity purchase
Purchase Price = £100,000
Your customer's share = £80,000
Your customer deposit = £5,000
Mortgage required = £75,000

The maximum financial incentive which is permitted
= £1,000 (95% of £80,000 = £76,000)

Application processing

If the customer is required to make interest payments to the subsequent charge holder for the equity providers retained share, this must be calculated and taken into account in affordability calculation regardless of when the interest charge becomes payable.

The amount of interest charged should be keyed as 3% from the start of the mortgage unless the actual rate is higher, in which case the actual rate should be used. If customer does not pay any interest, then a rate of 0% should be used.

The figure calculated must be entered in ‘Monthly Interest Payment' field.

Shared ownership allows a customer to buy a home in stages. The customer purchases a property jointly with either a Housing Association, also known as a Registered Social Landlord or a Local Authority.

The customer will own a percentage of the property, with the remaining percentage being owned by the Housing Association/Local Authority. The terms of this arrangement is set out in a shared ownership lease.

When a customer applies for a mortgage to buy a shared ownership property we are only lending on a specific percentage of the property value which means the customer will own a share of the property and pay rent to the Housing Association/Local Authority for the remaining share. Some shared ownership schemes may be aimed at members of the public such as key workers. Shared Ownership is only available where the share being purchased is between 25% and 85% of the property's value. The maximum loan against the customers share is subject to normal lending limits to a maximum of 90% for both second hand and new build purchases, unless the property is a new build conversion or renovation where we will restrict this to 80% of the share being purchased. See below for restrictions in Scotland & Northern Ireland.

For shared ownership the customer must pay a 10% personal deposit of the share being purchased (excluding any deposit provided by a builder or housing association). Cash Incentives for shared ownership are acceptable provided the total value of the loan plus incentive together does not exceed 90% of the value of the share being purchase.

Shared ownership mortgages must be held on a repayment basis and affordability will be capped at 4.5 times income.

A Mortgage Protection Clause (provided by a Housing Association) /Section 442 Guarantee (provided by a Local Authority) is a form of indemnity insurance to protect the bank against loss (should the customer default on their payments and the bank make a loss selling the property in possession).

Restrictions may apply dependent on the location of the property:

• England & Wales - A Mortgagee Protection Clause (MPC) or a Section 442 Guarantee must be in place.
• Scotland – A section 442 Guarantee and Mortgage Protection Clause are not available. Lending must be restricted to 75% of the value of the share being purchased.
• Northern Ireland - An MPC or Section 442 Guarantee is not available, lending above 75% of the customers share will be permitted if Northern Ireland Co-ownership Housing Association (NICOHA) or Fairshare provide a Side Agreement which indemnifies the bank against loss. Where no Side Agreement is available, lending will be restricted to 75% of the value of the share being purchased.

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. The date of registration at the Land Registry is how we determine the length of ownership.

This means that the current vendor must have owned the property for at least six months before we can accept an application to purchase that property.

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).

The following cases are exceptions where it is acceptable for the property to be sold on within six months of acquisition by the seller.

Where sales are by:

• A personal representative of the registered proprietor; or
• An institutional mortgagee exercising its power of sale; or
• A receiver, trustee-in-bankruptcy or liquidator; or
• A developer or builder selling a property acquired under a part-exchange scheme.
• A registered Housing Provider (Housing Association) exercising a power of sale.

We will also accept inherited properties where the applicant is a beneficiary but has not owned the property for 6 months. Applications where the applicant is not a beneficiary of the inherited property and the beneficiary has owned the property for less than 6 months are not acceptable and must be declined. The conveyancer will be responsible for ensuring the application meets the acceptable criteria.

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.

• We do not lend on freehold flats unless freehold reversion / Tyneside arrangements apply and there are no more than four flats in the building. In addition we accept Coach house freehold flats where the garages underneath are subject to a long lease.
• For leasehold property there must be a minimum of 70 years remaining on the lease at application. Shorter lease terms are only accepted on certain central London estates and subject to specific criteria.
• Commonhold property is not accepted.

Each application will be assessed on its own merits although there are some property types which are specifically excluded.

Further advice can be found here.

Timber or metal framed buildings where the cavity, between frame & cladding, has been retrospectively filled with an insulation material

Concrete walls as built in Cornwall or Devon before 1950 (1960 for postcodes PL12, 13, 14, 15, 17, 18, 22 & 23) where valuer has recommended a Mundic report and test of the concrete has classified the concrete in either class B or C

Unrepaired, designated defective properties under the Housing Act 1985, Housing (Scotland) Act 1987, Housing (Northern Ireland) Order 1986 are not acceptable.

Flats or maisonettes of large panel system type unless acceptable structural appraisal on the whole block.

Load bearing panels of asbestos or gypsum plaster construction

Properties which are structurally unsound & Properties which are uninsurable.

• Property must be assessed as an individual residential property intended for owner occupation.
• Farms or property with land that is subject to commercial agricultural use, Commercial property and Timeshare are not acceptable.
• Limited incidental business use may be acceptable subject to property retaining residential status.
• Live / work schemes may be acceptable on mainstream lending only subject to compliance with planning condition and ‘work' element using less than 40% of the property.

The minimum valuation amount for all lending is £40,000.

For further guidance around valuations, please see our Valuation FAQs.

Please also refer to our further guidance around valuation appeals.

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

The customer 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 standalone 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.

Tracker rates are linked to the Bank of England bank rate. This is announced from time to time by the Bank of England's Monetary Policy Committee (MPC). If the MPC decides to change the bank rate, we will change the tracker rate in line with it. This will be within 30 days of the publication of the minutes of the MPC meeting at which the decision to change the bank rate was made.

At the end of the tracker rate period the tracker rate mortgage will cease to be a tracker rate mortgage and we will charge your client interest at:

• Halifax Homeowner Variable Rate - for mortgages applied for after 4th January 2011.
• Halifax Standard Variable Rate - for mortgages applied for before 4th January 2011.

Unless we write to tell them that we are prepared to allow the mortgage to remain a tracker rate mortgage.

All variable rates are stated at their current levels and are subject to change.

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

If the customer now resides in the property, then the application can proceed as normal.

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

An application for consent to lease can be considered for armed forces personnel on their intended main residence even where it is known that immediately following completion, the property is to be let.

A consent to lease would not normally be considered until the mortgage has been in place for six months but armed forces personnel are exempt from this rule.

Some of our products have early repayment charges attached to them. An early repayment charge will apply if your client takes a product transfer or repays some or all of their mortgage during the early repayment charge period.

If your customer chooses a mortgage product with early repayment charges, as a concession, in any calendar year, they may repay up to 10% of the amount outstanding on their product, without having to pay an early repayment charge. We reserve the right to change or withdraw this concession at any time.

On a porting or product transfer application any Early Repayment Charge which may apply on your customer's current mortgage product will be waived if the product has 3 months or less to run.

The ERC will apply where the product has more than three months to run.

Occasionally customers will find themselves in financial difficulties and requiring our assistance. We support customers throughout the life of their mortgage and will work with them to remedy any difficulties wherever possible.

Financial difficulty is defined by the following categorisation:

1. Budgetary Issues: Able to afford current commitments and expenditure but poor at managing day to day control.
2. Overspending: Able to afford current commitments but spending on non-essentials means an overall negative budget. Need to reduce spending in order to meet priority payments.
3. Temporary Difficulties: Loss of job, sickness, relationship breakdown, bereavement etc. resulting in reduced income and unable to support current spending and/or commitments. Temporary assistance required until income level restored and/or spending permanently reduced.
4. Over-committed: Unable to afford current commitments even after reducing non-essential spending. This may require restructuring of any unsecured credit commitments at non-concessionary rates and reduced spending to meet priority payments such as their mortgage.
5. Over-indebted: Unable to afford current commitments and unable to reduce spending to make priority payments and budget affordable. It may require the ability to make reduced repayments within concessionary repayment plans.
6. Severely Over-indebted: Unable to afford current commitments and unable to restructure/reduce spending to bring budget into balance. Only has the ability to offer token repayments which are insufficient to meet a concessionary repayment plan or refinancing loan.

In all instances existing mortgage customers should be referred to the Payment Assistance Line : 0808 145 0437.

For all new lending, it is important customers in financial difficulty are identified as applications would not usually be considered.

For Mortgage Prisoners criteria, please see our Mortgage Prisoners section.

Your clients can borrow more money against the value of their home.

• The additional borrowing is secured against their existing Halifax mortgage.
• Further advance applications will not be permitted within 6 months of completion of the original mortgage.
• Maximum 2 further advances allowed in a 12-month period.

Minimum Further Advance loan amount £10,000

Maximum 85% Loan to Value

Where above 80% LTV (based on current indexed valuation) a revaluation will be required and a revaluation fee will be due

The list of acceptable reasons for a Further Advance are as follows:

• Consumer goods
• 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

If your client is currently in or has been in arrears, please see our Arrears section.

If a further advance application has not passed our credit score please see our Credit Score Decline Appeals section.

Existing Halifax Customers Moving Home

If the maximum loan available on affordability for a new application is below that required, the application may be considered on the loan amount required if all the below criteria are met:

• Loan Amount - No increase in borrowing (new mortgage loan amount must be less than or equal to the existing mortgage balance)
• Monthly Payment - New monthly payment no more than 5% above existing payment
• Term - No increase in term for Interest only applications. For a full repayment application the term can increase, provided the new mortgage is not Lending into Retirement. Term reductions that would increase the monthly payment would be subject to an affordability review. If an existing term takes the applicant into retirement we will consider if the existing term is still acceptable.
• Arrears - No current arrears on existing mortgage
• LTV - An increase of up to 10% in loan to value (LTV) is acceptable, where the new LTV does not exceed 60% LTV (e.g. 45% to 55% LTV is allowable). Where the new LTV is above 60% there can be no increase above the existing LTV. The existing mortgage LTV can be calculated based on the sale price of the property rather than the indexed valuation
• Repayment Basis - No changes allowed
• Affordability - Maximum income multiple of 4.75x

There will be no discretion to proceed outside of these criteria and the application will be subject to a full review by our underwriters before we can confirm if it can proceed.

Customers named on the new mortgage application must be the same as those on the existing mortgage.

Please ensure you consider the full financial circumstances of the customer before submitting an application.

Overpayments

Lump sum or regular overpayments can be made at any time. If early repayment charges apply to the product, refer to early repayment charges for more details.

Payment holidays

If your clients wish to take a payment holiday and if they meet criteria it may be possible for them to take up to a maximum of 6 months over the lifetime of their mortgage. One holiday is allowed every 3 years with a maximum of 2 months per instance.

A payment holiday can be requested for any reason and each circumstance should be individually assessed using questioning skills to establish if this is the correct method to support the customer.

It is very important that your client has not indicated they are in financial difficulty, and the purpose for the request is both reasonable and in their best interest. It is important to remember that a payment holiday is a short term solution for short term need.

If your client does take a payment holiday they need to be aware that the interest usually charged will be added to the balance of the mortgage.

Their account will be recalculated at the end of the payment holiday and written confirmation will be sent out approximately 2 weeks before their payment will restart. The monthly payment will be calculated at that time using the higher balance and spread throughout the remaining term.

If they have any sub accounts on Interest Only they need to be aware that these balances will increase to cover the amount of accrued interest that has been added due to the missed payments. Therefore, they will need to check that their repayment plan is on track to repay this mortgage at the end of the term.

Whilst your client has an active payment holiday, they will be ineligible to apply for a Further Advance or a Mortgage Review. They can only proceed with an application if they stop the payment holiday, or wait until it has ended.

Criteria

• The mortgage must have been open for at least 12 months with no further borrowing in the last 6 months.
• The account must not be in arrears at the time of the application or have had any historic arrears on the account (in the last 12 months).
• The account must not have had any missed payments in the past 12 months.
• There must be no payment arrangement in force or have been within the last 6 months.
• The total debt on the mortgage must not exceed 75% at point of application; there will be the option for a revaluation (fee applicable).
• The mortgage property must not be on a Shared Ownership scheme.
• The mortgaged property must be the Main Residence, and is not rented out.
• Customer(s) must not currently be claiming on a Mortgage Repayments Insurance policy or be applying for, or be in receipt of, Income Support.

If an existing Halifax mortgage is repaid while an Early Repayment Charge (ERC) applies this charge will be due unless the amount on the existing product is ported to a new application, when the ERC will be waived. The ERC can also be waived without porting, if a new mortgage is being taken in the last 3 months of the ERC period. In a non-simultaneous sale and purchase scenario the ERC has to be paid but can be refunded as explained below.

Please notify us when you submit any new application for an existing Halifax mortgage customer, by advising the colleague when making an initial call or by completing the Contact form held on our Literature page and uploading this. Please explain if the product is being ported or if not why so we can take the necessary actions.

If a product is portable this is outlined in the original mortgage offer and supporting documentation. You cannot port a product onto a remortgage application from another lender, but can port to a remortgage of an unencumbered (mortgage free) property the customer already owns, where this will become their main residence. Where Halifax Standard Variable Rate is the reversionary rate which applies to the product being ported, it will continue to be the reversionary rate for the amount of the new mortgage which is on the ported product. Any extra amount borrowed on the new mortgage must be on a product from the current range and applicable scheme. The reversionary rate which applies to that product and the amount on it will be Halifax Homeowner Variable Rate.

To port a product the new mortgage application must complete simultaneously with redemption of the current mortgage. The conveyancer must indicate a product is being ported when they obtain a redemption statement for the existing mortgage; the statement will then explain that the ERC does not need to be included in the redemption monies.

If the amount to be ported to a new loan is lower than the amount currently on the product the full ERC will need to be paid upon redemption, but a partial refund of the ERC will be arranged following redemption on a pro rata basis i.e. if £100,000 of £200,000 on the existing product is being ported then 50% of the ERC paid would be refunded.

Within the last 3 months of an ERC period the product does not need to be ported to a new mortgage; as long as the new loan amount is not lower than the existing amount on the product with ERCs, a product from the new current range can be chosen for the new mortgage and the early repayment charge will be waived.

Where a customer sells their property and repays their existing mortgage before they complete on a new purchase, they will incur any ERCs that apply. However, if they apply for a new mortgage with us within three months of repaying their existing mortgage, while they cannot port and would choose a new product from the current range at that time, once the new mortgage has completed we will process a refund of the ERC. This is a concession and it may not always be available. The new loan amount must not be lower than the amount previously on the product, or a partial refund of the ERC will be received on a pro rata basis. During the processing of the new application you should tell us where a refund of an ERC will be required or complete a Contact form. You should also call us when the new mortgage completes so we can request the refund of the ERC is actioned.

Buy to Let mortgage products cannot be ported onto non Buy to Let mortgages.

To key to port a product on a new application:

• Make sure 'Existing Customer' has been chosen as 'Purchase Type' on Personal Details screen.
• On the Products selection screen complete 'Roll number' or 'Account Number' with the customer's existing mortgage account:
  • The 'Roll number' is their original application roll number - if the final digit after the dash is a single digit remember to input a zero ahead of this e.g. for 9 key '09'; 10/12345678-9 is keyed as 101234567809
  • Or key 'Account Number' in a 14 digit format e.g. 10/12345678-9 should be keyed as 10123456780900 including a zero ahead of the final digit if this is a single digit and two zeros at the end to make 14 digits.
• Any products available to port will then show.
• Please ensure the customer's name, date of birth and address details are keyed correctly on the new application to exactly match the existing mortgage as shown in Mortgage Enquiry, for the portable product(s) to show available.

We will be undertaking affordability checks on product transfers where there are material changes which affect affordability; where the customer is lending into retirement, reducing their term on the Capital and Interest element of the mortgage, changing repayment type or where they do not have adequate repayment vehicles in place.

Where there are no material changes to the mortgage the product transfer will be assessed on the customer's budget assessment.

Product transfers can be submitted at any time in the month. The earliest a product transfer can take effect is the 1st of the following month.

Where your client is within the last 3 months of an existing product you can choose to start the new product from the 1st of the following month and we will waive any Early Repayment Charge OR to forward date the new product to start after the current product has ended.

Any documentation requested must be received in sufficient time for the product transfer to be offered before the end of the month prior to the date of effect.

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

If, however, a mortgage is non-FCA 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 FCA Regulated.

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

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 Letter of Postponement (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.