New build, shared ownership and resale price covenant (RPC) changes

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From 1 July we are increasing the availability of new build, shared ownership and RPC scheme mortgages by increasing the maximum loan to value (LTV) available from 90% to 95%.

New build

The maximum loan to value (LTV) available for the purchase of new build houses/bungalows is being increased to 95% with new products available for all intermediaries and for properties built by all builders.

New build purchases above 90% LTV will be considered under the Mortgage Guarantee Scheme - with the ‘Homebuyer Special' scheme selected when keying on Halifax Intermediaries Online - and the same criteria applies above 90% including:

  • Minimum 5% personal deposit is required
  • Product fees cannot be added above 95%
  • Cash incentives are acceptable provided the loan, cash incentive and any product fee being added together do not exceed 95%
  • Maximum loan amount of £570,000
  • 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
  • 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.

For new build flats the maximum 85% LTV will remain and for converted or refurbished properties the maximum LTV will remain as 80%.

Shared ownership

We are increasing the maximum LTV for purchases on the shared ownership scheme from 90% to 95% of the customers share. This applies for both second hand and new build purchases (houses/bungalows and flats), unless the property is a new build conversion or renovation where we will restrict this to 80% of the share being purchased. Any LTV restrictions in Scotland and Northern Ireland will continue to apply.

The customer must pay a minimum 5% personal deposit of the share being purchased. The deposit must be a minimum £4,000 and this excludes any deposit provided by a builder or housing association. Cash incentives are acceptable provided the total value of the loan plus incentive, and any product fee being added, together does not exceed 95% of the value of the share being purchased.

The ‘Homebuyer Special’ scheme would not be selected on shared ownership applications above 90% LTV.

As a reminder it is important on shared ownership applications that the correct rental amount, and on shared equity applications the correct interest payment, are keyed. For Help To Buy shared equity schemes in England & Wales a 3% interest amount should be keyed and for schemes with planned payment increases the higher figure should be keyed e.g. if in years 1-5 is 3% but increases to 5% from year 6, the 5% figure must be keyed.

Resale price covenant (RPC)

The maximum loan available is being increased from 90% to 95% of the discounted purchase price i.e. the personal deposit required is being reduced from 10% to a minimum 5%.

For new build properties purchased under an RPC (also known as Discount Market Scheme, DMS), the revised new build LTV limits will apply based on loan amount against the discounted purchase price i.e. 95% for newbuild houses/bungalows, 85% for new build flats.

The ‘Homebuyer Special’ scheme would not be selected on RPC applications above 90% LTV.

These changes apply to new applications started from 1 July only. The increased LTVs would not be available on an application started before 1 July. If an increase in the loan amount was required on an application started before 1 July a new application would have to be keyed from the start. If a Decision In Principle (DIP) had been keyed before 1 July the old LTV limits would apply if this was converted to a full application after 1 July and for the new LTV limits to apply a new application should be keyed from the start.

Our website Criteria pages will be updated from 1 July and our normal product change communications will be issued with details of the new products.

Our tracker rate mortgages are linked to Bank of England bank rate (also known as Bank of England repo rate). Details of this rate can be found on the Bank of England website at www.bankofengland.co.uk.

For independent information on mortgages, visit the website 'Money Advice Service'.

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