Mortgage rules for residential customers

Things to consider before your application

The valuation provides us as the lender, with the security that the property is worth the value of the mortgage loan.

  • You need to be at least 18 years of age to apply for a mortgage.
  • You must have been permanently resident in the UK for at least two years to apply for a mortgage with us. We cannot lend to a customer who lives outside the UK. Applicants must be UK citizens or hold a European passport.
  • The minimum loan term is 5 years.
  • The maximum loan term is 35 years (provided that this does not take the loan beyond your 75th birthday).
  • You have the right to repay the loan either partially or in full during the term of the loan.
  • We do not currently offer loans that are defined as “Foreign Currency Loans” by the European Mortgage Credit Directive. We therefore cannot take in to consideration any income that is paid or converted from a currency other than UK sterling.
  • When you request a lending decision, we verify your details with a credit reference agency - this leaves a record on your credit file.

You will have the following commitments whilst you have a mortgage with us:

  • Maintain regular payments on your mortgage
  • Look after the property and keep it in a good state of repair.
  • Fully insure your property with an adequate Home Insurance Policy whilst you have a mortgage with us. You may choose the provider of this policy as long as it meets our requirements.
  • These are some of the obligations you will have as part of taking out a mortgage. You will receive full details with any mortgage offer we issue.

If you fail to meet these (or other) obligations, there may be additional costs for you where we have to carry out further work and/or incur extra costs.

If in the future you have trouble making your mortgage payments, you should contact us as soon as possible so we can try to help you. We'll be able to discuss your circumstances and wherever possible offer help to meet your individual needs.

Ultimately, your mortgage is a loan which is secured against your home. This means that as a last resort, we can take action to repossess and sell your home if you do not keep up payments on your mortgage or in the event of any severe breaches of your obligations.


The purposes for which the mortgage loan may be used

We can only accept applications for the purchase or re-mortgage of your main residence. Portability/Additional lending/Transfer of Equity applications must also be secured on, and in relation to, your main residence.


Security

We always require security for a mortgage loan in the form of a first legal charge over the customer’s property.

Methods we use to value properties

Before we can lend you the money to buy your home, we need expert guidance on what the property is worth as security for us.

  • We may instruct a valuer to visit the property and produce a written report.
  • We may ask a valuer to carry out a quick check of the outside of the property (sometimes known as a drive-by valuation).
  • We may use a specialist database to compare the details against other comparable properties in the area.
  • We may carry out a Property Assessment (based on database information, an external appraisal of the property by a valuer, or a combination of both).
  • We will choose which of the above methods/combination of methods to use in a particular case.

Unless you have chosen one of our fee-assisted mortgages, all these options have an associated cost. You'll be asked to pay this cost before your mortgage completes. Unless you tell us otherwise, we will instruct the valuation as soon as we begin to process your application.

Once a valuation has been carried out, we can't refund the fee even if your mortgage does not go ahead.

For more information on our valuation fees visit the Fees and charges page.

The form of security we require

Properties located in England, Wales, Scotland and Northern Ireland are acceptable. Properties located in the following areas cannot be accepted:

  • Isle of Man
  • Channel Islands

Freehold, Commonhold, Heritable and Leasehold properties are acceptable. For leasehold properties the following must apply:

  • For leasehold properties there must be at least 85 years unexpired on the lease remaining at the start of the mortgage

We will use any ground rent or service charges you will have to pay in relation to a leasehold/heritable property in our affordability assessment. We will need to see either sales particulars, a letter from the estate agent, bank statement (for remortgages) or a solicitor's letter as proof of the monthly payment.

Unacceptable residential property types

  • No internal bathroom and W.C. or kitchen (unless to be installed prior to completion, cover by way of retention)
  • Liable to be subject to clearance or compulsory purchase order
  • Freehold flats and maisonettes
  • Agricultural properties with restrictive covenants
  • Isolated rural properties with restricted access and services
  • Residential property divided into bed sitting rooms
  • Pre-cast re-enforced concrete properties, designated under the Housing Act 1985, part xvi, unless they have been repaired by PRC Homes Ltd, a subsidiary of the NHBC
  • Studio and Basement flats
  • Flats with balcony access i.e. access via covered walkway
  • New build maisonettes/apartments/flats where the LTV exceeds 85%
  • New build houses where the LTV exceeds 85%
  • Live/Work properties
  • Shared ownership
  • Right to Buy
  • Ex local authority within any pre-emption period
  • Timeshare accommodation and Holiday Homes
  • Dwellings of totally timber construction i.e. not clad with brick, stone etc, including the log cabin/chalet type of construction
  • Partially built property
  • Used as a Buy To Let property(BTL)

Types of mortgage

All new mortgages can be set up on a Capital & Interest (repayment) basis, an Interest Only basis or a part Capital & Interest part Interest Only basis.

Capital & interest mortgages

With a Capital & Interest mortgage the borrower's monthly payment will include elements of both interest and capital. Provided all payments are maintained, the loan will be repaid at the end of the term.

Interest only mortgages

With an Interest Only mortgage the borrower's monthly payment will only include the interest element. This means that at the end of the mortgage term the original amount borrowed on an interest only basis will need to be repaid.

Please be aware that different criteria apply for interest only mortgages. Please see our lending criteria for further information.

It is important to ensure that you regularly review the adequacy and performance of your chosen repayment strategy. If all or part of your mortgage is on an interest only repayment basis, please be aware that making your monthly mortgage payments and compliance with the other terms and conditions of your mortgage contract will not ensure that the loan will be fully repaid at the end of the term.

Fixed rate mortgages

  • With a fixed rate mortgage your mortgage interest rate does not change over a set period of time, regardless of what is happening to interest rates elsewhere.
  • This may help you to plan your budget and avoid any increase to your monthly payments if rates rise.
  • However, you will miss out on any drop in your monthly payment should rates elsewhere decrease during the fixed rate period.
  • We offer a range of fixed rates for 2, 3, 5 & 10 year periods**, after which time the interest rate reverts to our standard variable rate at the time.
  • You have the right to repay the loan either partially or in full during the term of the loan.
  • Early Repayment Charges apply during the fixed rate period. Other fees and charges apply.

**The fixed terms we offer can vary from time to time depending on which products are on sale.

Tracker mortgages

  • Tracker mortgages track the Bank of England Base Rate (a variable rate of interest) over a specified period of time.
  • This means that the interest rate you are charged will rise when the Base Rate increases and fall if it decreases, affecting your mortgage payments in the same way.
  • A minimum rate of interest is applied to Tracker products (‘the collar’) which means that when the Base Rate falls, the interest rate you pay also falls but won’t go below this minimum rate of interest.
  • A maximum rate of interest if applied to a Tracker product is called a “cap”. This means that if the Base Rate increases, the interest rate you pay will not go above this maximum/cap.
  • If you’re interested in Tracker mortgages, you need to make sure you are happy to accept the risk that your mortgage payments would increase in the future if the Base Rate rises.
  • You have the right to repay the loan either partially or in full during the term of the loan.
  • Early Repayment Charges apply during the tracker rate period. Other fees and charges apply.

Offset mortgages

  • Offset mortgages provide you with the opportunity to use your savings to reduce the cost of your mortgage, meaning that instead of earning interest on your savings you can reduce the amount of interest you pay on your mortgage.
  • This can help to reduce the length of time it takes to repay your mortgage or to lower your monthly payments now or in the future.
  • You will still have the flexibility to access your savings to deposit more or make withdrawals but doing so will change how much you could save on mortgage payments or the time it takes to repay your loan.
  • The reduction in your mortgage payments or mortgage term could be worth more to you than the return you would otherwise have received from placing your savings in a deposit account.
  • You have the option to either fix the interest rate on your offset mortgage for a set time or for your interest rate to track the Bank of England Base Rate for a specified period of time.
  • You have the right to repay the loan either partially or in full during the term of the loan.
  • Early Repayment Charges apply during the offset fixed/offset tracker rate period. Other fees and charges apply.