purpose · web view1.1 equal opportunities foundation home loans operates an equal opportunities...

Packager GuideBuy to Let

November 2018

1 | P a g e B u y t o L e t P a c k a g e r G u i d e

ContentsPurpose........................................................................................................................... 6Designed With You in Mind.............................................................................................6Our Commitments To You...............................................................................................61. GENERAL..................................................................................................................7

1.1 Equal Opportunities...............................................................................................71.2 Age........................................................................................................................ 71.3 Term......................................................................................................................81.4 Loan Size...............................................................................................................81.5 Loan Purpose.........................................................................................................81.6 Portfolio Lending....................................................................................................91.7 First Time Buyers...................................................................................................91.8 Landlords...............................................................................................................9

1.8.1 First Time Landlords........................................................................................91.8.2 Experienced Landlords..................................................................................101.8.3 Portfolio Landlords.........................................................................................101.8.4 Landlords in Wales........................................................................................10

1.9 Acceptable Borrowers..........................................................................................101.10 Number of Borrowers.........................................................................................11

1.11 Source of Deposit...........................................................................................111.11.1 Savings........................................................................................................111.11.2 Developer Deposits.....................................................................................121.11.3 Gifted Deposits............................................................................................121.11.4 Bridging/Second Charge..............................................................................121.11.5 Limited Company Borrowers.......................................................................13

1.12 Criminal Convictions..........................................................................................131.13 Methods of Repayment......................................................................................141.14 Guarantors.........................................................................................................14

2. CREDIT HISTORY.....................................................................................................142.1 Credit Scoring......................................................................................................142.2 Credit and Company Searches............................................................................142.3 Company Searches..............................................................................................142.4 Standard Credit Criteria.......................................................................................15


2.5 Company Voluntary Arrangement (CVA) /Failed Companies...............................152.6 Re-mortgage of an existing borrower..................................................................16

3. AFFORDABILITY.......................................................................................................163.1 Rental Calculation................................................................................................163.2 Employment and Income.....................................................................................17

3.2.1 Employed.......................................................................................................173.2.2 Self Employed................................................................................................173.2.3 Professional Landlords...................................................................................17

4. SUPPORTING DOCUMENTATION..............................................................................174.1 Declaration.......................................................................................................174.2 Mortgage Conduct............................................................................................184.3 Proof of Residency............................................................................................184.4 Proof of Income................................................................................................184.5 Bank Statements..............................................................................................184.6 AST Agreement................................................................................................184.7 Ground Rent and Service Charge.....................................................................184.8 Direct Debit Mandate.......................................................................................184.9 Validity Periods.................................................................................................194.10 Reoffers............................................................................................................20

5. RESIDENCY.............................................................................................................215.1 Proof of ID and Residency................................................................................21

5.1.1 Face to Face Transactions..........................................................................215.1.2 Non face to face Transactions.......................................................................225.2 Required Documents........................................................................................225.3 Certified Copies................................................................................................235.4 Foreign Nationals.............................................................................................24

5.4.1 EEA Foreign Nationals................................................................................245.4.2 Non-EEA Foreign Nationals.........................................................................24

5.5 Expatriates.......................................................................................................255.6 Sanction Searches............................................................................................265.7 Embassy Staff..................................................................................................26

6. SECURITY AND VALUATION REPORT.......................................................................266.1 Security............................................................................................................266.2 Property Valuation............................................................................................26


6.2.1 Physical Valuations........................................................................................266.2.2 Automated Valuation Models.........................................................................27

6.3 Letting..............................................................................................................276.4 Non Acceptable Tenants..................................................................................286.5 Location and Tenure.........................................................................................286.6 Property Location.............................................................................................286.7 Acceptable Security.........................................................................................296.8 Unacceptable Security.....................................................................................306.9 New Builds.......................................................................................................306.10 Specialist Reports.............................................................................................326.11 Houses in Multiple Occupation (HMO) and Multi-Let Properties.......................326.12 EPC Ratings......................................................................................................346.13 Retentions........................................................................................................346.14 Audit Valuations............................................................................................346.15 Second Charges and Deed of Postponement................................................346.16 Power of Attorney.............................................................................................34

7. SOLICITOR AND LEGAL INFORMATION....................................................................347.1 Acceptable Solicitors........................................................................................34

7.1.1 Individual Applications/Standard properties...............................................357.2 Legal Charge....................................................................................................357.3 Possessory Title................................................................................................357.4 Acceptable New Build Warranties……………….…………...………………..

…………………33

7.5 Frequently asked legal questions…………………………………………………………………..34

8. USEFUL INFORMATION............................................................................................378.1 Current Turnaround Times...............................................................................378.2 Latest Product Information...............................................................................378.3 Useful Information Documents.........................................................................378.4 Useful Forms....................................................................................................388.5. Existing Borrowers.………….…………….

…………………………………………………………35

9. BROKER PORTAL USEFUL INFORMATION..............................................................3869.1 Adding Notes to the Broker Portal....................................................................38


APPENDIX I....................................................................................................................42APPENDIX II................................................................................................................... 43APPENDIX III..................................................................................................................43


PurposeThe purpose of this guide is to provide an overview of Foundation Home Loan’s Lending Policy in order to help achieve our aim and yours; to enable an offer to be made on every packaged application received at Foundation Home Loans, and then to ensure that each case completes as quickly as possible.

Please note product specific criteria can be found in the relevant product guides located on our website www.foundationforintermediaries.co.uk

Designed With You in MindAs an intermediary only lender, we're committed to supporting you and ensuring that you can deal with us easily. You can rely on us to put you first, even down to the design of our systems and processes.

Our Broker Desk team are on hand to discuss a case and you can be certain that we'll always give you a straight answer, helping you to build and maintain strong, honest relationships with your clients. Call us on 0344 770 8032 or email us.

Our Commitments to YouWe understand how important it is for you to work with lenders you can rely on. That's why we stand by our commitments to you:

1. We will always give you at least 48 hours’ notice before withdrawing a product

2. You have direct access to a dedicated team trained to answer your queries about new or existing cases

3. We will aim to only ask you once for supporting documentation during the application process

4. You can always trust our current service levels; they are updated every day on our website so you know what to expect

5. Wherever possible, we will always explain why a case is declined


mailto:[email protected]

http://www.foundationforintermediaries.co.uk/

1. GENERAL

1.1 Equal Opportunities

Foundation Home Loans operates an Equal Opportunities Policy in relation to its lending. This means no person or group of persons applying for mortgages from the Company will be treated less favourably than any other person or group of persons because of their race, colour, ethnic or national origin, gender, or disability.

At least one borrower must meet all requirements of the general lending criteria (Section 1).

1.2 Intermediaries

Foundation Home Loans will only accept business through intermediaries who are authorised to transact mortgage business with the appropriate FCA permissions.

For Buy-To-Let lending, intermediaries must have the following permissions:

Either:

Advising on regulated mortgage contract And, arranging (bringing about) a regulated contract And making arrangements with a view to regulated mortgage contracts

Or: Credit Broking Intermediaries’

1.3 AgeIndividual Applications

Minimum Maximum21 years 85 Years

Limited Company Applications No maximum age for limited company applications All applicants must be over 18 years of age. At least one borrower over

21 years


1.4 Term

Minimum Maximum5 Years 30 Years

1.5 Loan Size

Standard PropertiesMinimum

Maximum Acceptable applicants

£50,000 £500,000 at 80% LTV

Standard & First Time Landlords

£50,000 £750,000 at 75% LTV


£50,000 £1,000,000 at 65% LTV


Houses of Multiple Occupancy and Multi-UnitsMinimum


£50,000 £1000,000 at 65% LTV

Standard only

£50,000 £750,000 at 75% LTV

Standard only

Large loan product

Minimum


£750,000 £1.5 million at 65% LTV

Standard only

Fees can be added up to a maximum loan size of £1,000,000.

1.6 Loan Purpose

Applications will be considered for the purchase or re-mortgage of a residential investment property (no commercial element to the property)


Properties must be owned for a minimum of 6 months before being considered for re-mortgage. Where bridging was involved this will be reduced to 3 months

Details of the loan purpose is required but evidence will not be required

The following loan purposes will not be considered: Back to back sale within the last 6 months Sale and rent back Inter family sales Purchase at under value Capital Raising for business purposes Consumer Buy-To-Let – More details can be found in APPENDIX I Re-mortgage for repayment of Tax or Gambling debts Purchase via a property club Financing Self-Build

1.7 Portfolio Lending

The maximum portfolio value with Foundation Home Loans is £3,000,000.

1.8 First Time BuyersA first time buyer is defined as someone who has never owned a property.First time buyers are not acceptable for individual applications.For Joint Applications, at least one applicant must not be a first time buyer.For limited companies, at least one director must not be a first time buyer.Where an applicant is currently a non-owner occupier, evidence they have previously owned a property will be required. Suitable evidence would be:• Credit Search• Historical mortgage agreement• Land Registry title deedsIf an individual applicant is unable to provide evidence, the applicant(s) will be classed as a First Time Buyer and therefore declined.

1.8 Landlords


1.8.1 First Time LandlordsA first time landlord is defined as someone who has not operated a buy to let property within the last 6 months.First Time Landlords are acceptable where:• The borrower currently being an owner occupier• The deposit coming from the borrowers own resources and not gifted• The property is not either:

Above commercial premisesEx-Local Authority, MoD or Housing AssociationA property where the borrower owns adjacent land or access roadA House in Multiple Occupation or a Multi-Unit Property

1.8.2 Experienced LandlordsAn experienced Landlord is defined as someone who has been the registered owner of a self-financing buy to let property in the last 6 months.

1.8.3 Portfolio LandlordsBorrowers with, or looking to acquire 4 mortgaged properties, will be classed as a portfolio landlord and subject to further controls on their portfolio.Portfolio Landlords are acceptable where the mortgage being applied for fits Foundation Home Loan’s lending policy and:1. The LTV of the borrowers portfolio (including any unencumbered

properties) is no more than 75% 2. The stressed rental coverage (on an interest only basis, stressed at the

notional rate) of the portfolio, including unencumbered properties, is at least 125%

All borrowers fitting the definition of a portfolio landlord must submit a portfolio schedule in Foundation Home Loans format at full mortgage application.Any portfolio where one, or more, loans has a stressed rental coverage of less than 100% will be subject to further underwriting.To view an example of the Portfolio Spreadsheet please see APPENDIX IIThis document can be found at www.foundationforintermediaries.co.uk



1.8.4 Landlords in WalesLandlords of properties in Wales must be registered with Rent Smart Wales.

1.9 Acceptable Borrowers

Acceptable borrowers include: Individual borrowers Limited Company (registered in England & Wales) for the

purpose of letting residential property with at least one of the following SIC codes :

o 68100 Buying and selling of own real estate o 68209 Other letting and operating of own or leased

rental estateo 68320 Management of real estate on a fee or contract

basis

Newly incorporated Limited Companies are acceptable, subject to the incorporation being in place in time for the mortgage offer.

Umbrella Companies and trading Limited Companies are not acceptable.

1.10 Number of Borrowers

Individual Applications Maximum of two borrowersLimited Company Maximum of four directors

All borrowers/directors will be required to complete and sign a declaration.

Should a Limited Company have a shareholder with 20% or higher holding in the company, that is not a director, then we will require the Shareholder Consent and Declaration Form to be completed available on our website. They will also be subject to credit, and public record checks. No information is required for non-director shareholders with 19% or less shareholding.

If adverse credit outside our lending policy is found on a non-director shareholder the application will be declined.

1.11 Source of Deposit




A minimum of 15% of the deposit must be from own resources. All borrowers will be required to provide proof of deposit. Our underwriters will need to satisfy themselves as to the source of all the deposit monies, with evidence of how the savings were accrued, any unusual/large credits on bank statements need to be clarified along with any substantial savings evidencing the build-up of funds.

Foundation Home Loans will consider the following deposit types:

1.11.1 Savings Deposits from savings in the borrowers’ name are acceptable Deposits from overseas accounts can be considered on a case by case

basis

1.11.2 Developer Deposits A developer deposit/incentive is acceptable up to a maximum of 5% Developer deposits/incentives secured by way of a second charge and

rental guarantees are not acceptable

1.11.3 Gifted Deposits100% gifted deposit is acceptable from immediate family members if accompanied by a declaration from the family members confirming it’s a gift and no repayment is required and no interest will be held in the property. Family members considered are:

• Parents (including step parents and in-laws)• Grandparents• Grandchildren• Siblings• Children• Spouses• Civil Partners

NB. If the gift is a substantial amount of money we will request the solicitors advice on whether a Deed of Gift indemnity policy is considered necessary together with a declaration of solvency from the person providing the gift to avoid the gift being subject to the provisions of the Insolvency Act 1986.

Gifted deposits outside of the UK can be considered where the deposit is coming from one of the countries listed below:

Austria Belgium BulgariaCroatia Republic of Cyprus Czech RepublicDenmark Estonia FinlandFrance Germany Greece


Hungary Ireland ItalyLatvia Lithuania LuxembourgMalta Netherlands PolandPortugal Romania SlovakiaIceland Norway LiechtensteinMalta Spain SwedenSlovenia

Inter family sales or sale under value will not be accepted.1.11.4 Bridging/Second Charge

If any element of the deposit is provided by an element of bridging or second charge on the subject property this is not acceptable

Where a borrower has/is taking out bridging/second charge on another property to fund the security deposit on our security, this is acceptable

1.11.5 Limited Company BorrowersDirectors must evidence source of funds for all limited company borrowers. Only deposits meeting the criteria below will be acceptable:

Source of Deposit Criteria

Funds coming from retained profit, directors or shareholders

Cash held within SPV Acceptable – When Verified through company bank statements

Capital Raising on Existing Property held within the SPV

Acceptable – Provided assets are legally owned by the company. Verified through statements of funds offered or drawn

Directors Loan Acceptable – Subject to satisfactory completion of the Directors loan form and offer conditions

Shareholder funds on incorporation

Acceptable – Subject to proof of funds and special offer condition

Existing Shareholder providing further funds for new buy to let investment

Acceptable – subject to special offer condition

Funds coming from the sources unrelated to the SPV

Gifted Deposits Not acceptable where the gift is directly to the SPV

Gifts are permitted to a director of the SPV

Capital Raising on Personal Property

Acceptable – Where this is subsequently paid in as a directors loan or shareholder funds

Funds loaned from a separate legal entity

Will be considered on a case-by-case basis only


where the legal and beneficial ownership is the same as the borrowing SPV

1.12 Criminal ConvictionsAll applicants must not be subject to criminal proceedings nor have any convictions that are unspent under the Rehabilitation of Offenders Act (1974).

1.13 Methods of RepaymentFoundation Home Loans supports three methods of repayment:

Interest Only Capital Repayment or a combination of the two

1.14 Guarantors Individual applications: Guarantors are not acceptable Limited Company: All Directors will be required to sign a personal

guarantee for 100% of the loan amount

2. CREDIT HISTORY

2.1 Credit ScoringCredit scoring is used in our assessment of borrower quality and may inform our approach to underwriting.

2.2 Credit and Company SearchesSearches will be undertaken from a recognised Credit Reference Agency (CRA) and will be carried out on the Applicants full three year residential address history.

A credit search is valid for 3 months.


2.3 Company Searches

Company searches are valid for 3 months and utilises information from Credit Reference Agencies and Companies House.

All directors and shareholders with over 20% shareholding within the SPV will be subject to searches.

2.4 Standard Credit Criteria Standard Credit Criteria must be met by all applicants and shareholders

of limited companies with a 20% or more holding but are not party to the mortgage, where they have an active credit history

The arrears are defined as a borrowers’ worst status on an account, as reported to the credit bureau, over a specified period

All accounts must be up to date at the time of application All CCJ’s and Defaults must be satisfied at the time of application

Buy To Let Standard Plus Standard BTL and first time landlords

Active Credit Record At least one borrower must have an active credit history

At least one borrower must have an active credit history

CCJ’s No CCJ registered against any Borrower

No CCJ registered within the last 24 months, regardless of whether they have been satisfied.

Defaults No default registered against any borrower

No default registered within the last 24 months, regardless of whether they have been satisfied.

Bankruptcy No Bankruptcy Order registered against any borrower. Borrowers with a financial associate that has been declared bankrupt are acceptable

IVA or Administration Order No IVA or Administration Order against any borrower. Borrowers with a financial associate that has been subject to either an IVA or administration order are acceptable

Mortgage Arrears No Arrears Worst Status of 0 in last 24 months

Credit Cards Arrears No Arrears Worst status of 2 in the last 24 months with 0 in the last 12

Unsecured Loan Arrears No Arrears Worst status of 2 in the last 24 months with 0 in the last 12

Other Unsecured Arrears (Mail Order, Mobile Phone ,Utility)

Worst status of 4 in the last 24 months

Repossession and Voluntary Surrender

No repossession or Voluntary Surrender registered against any borrower

Payday Loans Borrowers who have entered into, or are still repaying, a


pay day loan in the last 24 months are not acceptable.Debt Management Plan including partial settlements and transfer to Debt Collector

Borrowers who have entered into, or are still repaying, a debt management plan in the last 24 months are not acceptable.

Arrangements with Lenders (including forbearance)

Active arrangement with other lenders are unacceptable

2.5 Company Voluntary Arrangement (CVA) /Failed Companies

Applications will be declined where there it is any history of the following:

a) Directorship of involuntarily liquidated or wound up companiesb) Receiverships c) Company Voluntary Arrangements (“CVA”)

2.6 Re-mortgage of an existing borrower An existing Foundation Home Loans and Keystone borrower must have

operated their existing mortgage account in a satisfactory manner for last 24 months.

A re-mortgage from an existing Foundation Home Loans will be considered subject to product availability and underwriting criteria at the time of application.

3. AFFORDABILITYBuy to let mortgages are deemed to be self-funding, however income must be evidenced.

Where the method of repayment is Capital and Interest, a further test in addition to the standard rental calculation will be undertaken to ensure the rental coverage of the proposed mortgage payment is met by a minimum of 100%.

3.1 Rental CalculationFor buy to let loans, affordability will be assessed on the basis of rental income coverage on an interest only basis. For fixed term rates shorter than 5 years

• 145% of the notional rate (see product guide for latest notional rate) for individuals

• Or, 125% of the notional rate (see product guide for latest notional rate) for Limited Companies


Where the product is a 5 year fixed rate or longer it is calculated at the fixed pay rate

• 145% of the pay rate for individuals • Or, 125% of the pay rate for Limited Companies

Rental cover is based on the valuers estimate or the current rental being achieved whichever is lower.

Where the valuation indicates regular breaks in occupancy over a twelve month period (for example, in the case of student lets) the stated rental income will be taken to be the annual rental income for the purposes of calculating the rental coverage.

3.2 Employment and Income

3.2.1 EmployedThere is no minimum term of employment or minimum income requirement; however, evidence is required see 4.4 for details. Any applicant in receipt of job seekers allowance or income support will not be acceptable.

3.2.2 Self EmployedWhere a company director owns 20% or more of the company shares they will be treated as self-employed.

No minimum period of trading is required and newly formed companies may be considered. Evidence of income is required see 4.4 for details.

The end beneficiary in any structure must be established and money laundering checks will be required on all directors, shareholders and those with beneficial interests.

3.2.3 Professional LandlordsProfessional landlords must declare and evidence income that is sustainable when taking account of total current and known future loan repayments and rental coverage requirements.


4. SUPPORTING DOCUMENTATION

4.1 DeclarationThe Declaration must be signed by all borrowers and must not be

amended.4.2 Mortgage Conduct

Evidence of the last 12 months mortgage conduct history (both residential and buy to let) will be verified using the applicants credit file.

Verification criteria is based on the number of mortgages in the applicants’ portfolio.

Where the portfolio is equal to five or less mortgages:Evidence of all mortgages in the portfolio will be required.

Where the portfolio is greater than five mortgages:Evidence of at least five mortgages in the portfolio will be required.

Where mortgage conduct cannot be verified through the applicants’ credit file: The applicant must provide 12 months proof of mortgage conduct up to date for a sufficient number of mortgages (max 5). We will also require site of the last annual mortgage statement to verify the loan balance outstanding.

All applicants must declare satisfactory mortgage conduct over the past 24 months.

Foundation Home Loans reserve the right to request additional evidence of mortgage conduct.First Time Landlords with redeemed mortgages in the last 24 months, evidence of the last 12 months active payments will be required.

4.3 Proof of ResidencyProof of three years residential history is required. Where this cannot be obtained from the credit search, additional proof of residency will be required. See section 5.2 for full details of acceptable documents.


4.4 Proof of IncomeIncome must be declared and evidenced through the provision of certified documentation as follows:

Last month’s payslips for employed applicants Last year accounts or SA302* for self-employed applicants Evidence of pension income for retired applicants (pension income

statement, payslip) Trust funds, investment and rental income as additional income

(SA302* or Income statement)*HMRC Online Tax Calculation acceptable in place of SA302.Where no such proof of income is available, bank statements, showing activity over the last three months, can be accepted for underwriting purposes.

4.5 Bank StatementsAll bank statements must be from a UK bank account and correctly certified to be accepted.Provision of Bank Statements is not mandatory, but may be requested at the underwriters’ discretion.

4.6 AST Agreement

Sight of the AST agreement is not required; however, Foundation Home Loans reserve the right to request a copy. This may be required to evidence the rental if the details can’t be verified via the EDM system for portfolios.

4.7 Ground Rent and Service ChargeSolicitors are required to ensure all ground rent and service charges payments are up to date with no outstanding liabilities.

4.8 Direct Debit Mandate

A Direct Debit Mandate (DDM) must be in place prior to completion of the mortgage, and must be drawn on a UK bank account acceptable for direct debit collections.The following are acceptable;

DDM, drawn on a personal account, in the name(s) of a single or joint applicants


DDM, drawn on a business account. This is providing the applicant is a sole trader and is named on the bank account title (i.e. “trading as”)

DDM, drawn on business accounts for the limited company (Limited Company applications only) DDM in the directors personal name are not acceptable

The following completed mandates are not acceptable; DDM, drawn on a personal account, solely in the name of a non-

borrowing individual DDM, drawn on a business account for a non-borrowing individual

(i.e. Different Ltd Company)We must receive the Direct Debit Mandate prior to completion ideally prior to offer.

4.9 Documentation Validity Periods

Document Validity Action on ExpiryProof of Identification 12 Months Request updated proof of

identityThe same proof of identification may be used for multiple applications with a month of initial submission.

Credit Search 3 Months New credit search to be undertaken

Full Mortgage Application

6 Months(from submission date)

6 – 9 months, confirmation from the customer of no changes to application detailsAfter 9 months, a full mortgage application must be resubmitted

Valuation 6 Months Re-valuation is acceptable up to 9 months, after which a new valuation is required.

Offer 4 months Reoffer is requiredDirect Debit Mandate 6 Months

(from date of signature)New signed mandate required on expiry with no grace period.

Proof of deposit 6 months(from date of receipt)

Request confirmation, or resubmission when source has changed

Proof of income 6 months(from date of receipt)

Request confirmation, or resubmission if customer circumstances have changed

Portfolio Schedule (Portfolio Landlords Only)

6 months(from date of receipt)

Request resubmission on any application received after expiry


4.10 Reoffers Reoffers are required where an application does not complete within three months from the date of offer. Reoffers are subject to the validity periods set out above and all expired items must be updated and a new offer released where a borrower still satisfies this lending criteria.

5. RESIDENCY

All applicants must be resident in the UK (excluding Expatriate applications) at the time of application and have indefinite right to remain or indefinite right of entry

Applicants would normally have been permanently resident in the UK for the last three years

Any applicant who does not meet the above criteria may be considered on a case by case basis subject to meeting the following criteria:

Members of HM Armed Forces who are serving or have served abroad during this period

Members of the British Diplomatic Corps who are or have been on foreign postings during this period

Employees of UK based companies who are working or have worked in overseas offices during this period

5.1 Proof of ID and Residency

To comply with Anti-Money Laundering regulations, we will undertake checks to verify the identity of the applicants and also the current and, if applicable, previous residential addresses of all applicants, limited company directors and shareholders holding 20% or more of the limited company.These checks will be made electronically, but where we are unable to satisfy the requirements electronically, documentary proof of identity and/or residency will be required.The minimum requirements, together with acceptable documents to fulfil those requirements, are detailed in the table below. Foundation Home Loans reserve the right to request more than the minimum depending on the circumstances.

5.1.1 Face to Face Transactions


Borrower found on the Voters Roll at the declared residential address - one document from List 1 is to be obtained to verify identity.Borrower is not found on the Voters roll at the declared residential address, two documents are to be obtained, which may be:

one from List 1 and one from List 2, below; or one from List 1 and one from List 3; or two from List 2; or one from List 2 and one from List 3, below

5.1.2 Non face to face transactions

Transactions conducted on a non-face to face basis are considered to be higher risk than standard face to face transactions. Therefore in addition to the above, one further document to verify either identity or residency is to be obtained.

In all instances, care should be taken to ensure that any documentation produced is current, i.e. no more than three months’ old and within any expiry date.

5.2 Required Documents

Requirement Acceptable DocumentsOne government-issued document from List 1, bearing: The applicant’s full name; and The applicant’s photograph;

and either The applicant’s residential

address; or The applicant’s date of birth

List 1: Valid passport Valid UK photo card driving

licence (full or provisional)* EU Member State National

Identity Card Firearms certificate or shotgun

licence Identity card issued by the

Electoral Office for Northern Ireland

OrTwo government-issued documents (without a photograph) from List 2, bearing: The applicant’s full name; and

either The applicant’s residential

address; or The applicant’s date of birth

List 2

Valid old style full UK driving licence*

Recent evidence of entitlement to a state or local authority-funded benefit, tax credit, or pension

OrOne government issued

List 3 Current council tax demand


document from List 2, as above, plus one other non-government-issued document from List 3

letter or statement Current bank statement or

credit/debit card statement, issued by a regulated financial sector firm in the UK (but not one printed off the internet)

Recent utility bill (but not one printed off the internet)

Annual Mortgage Statement sent to the customers residential address

* Licence must show the borrower(s) current address unless moved within the last three months, in which case a licence at the previous address can be accepted.

5.3 Certified CopiesAll documents must be correctly certified as follows;1. True copies of the originals2. The name of the person certifying it (we must be able to identify the person/firm certifying the documents)3. Dated4. If copying a document results in a photograph being unrecognisable, the certification should include a statement that “it bears a good likeness to the individual.” Foundation Home Loans will accept documents correctly certified by the following persons:• FCA regulated independent financial adviser or mortgage broker• Member of the legal profession, e.g. solicitor, barrister, legal

executive, paralegal, notary• Commissioner of Oaths• Justice of the Peace• Accountant• Healthcare professional, e.g. doctor, registered nurse, pharmacist,

dentist, optician • Teacher/Lecturer• Bank/building society official• Civil servant/Local government officer• Social worker• Minister of religion/Salvation Army Officer• Police officer• Post Office ID Checking Service


Coloured photocopies are acceptable. We also have a document certification form that can be used to certify all documentation being submitted together. This is available on our website.

5.4 Foreign Nationals

5.4.1 EEA Foreign Nationals Under the terms of the EEA agreement, all EEA citizens have full rights to enter, live and work in the UK, provided they are able to support themselves without the need for State benefits.The following countries are in the European Economic Area or their nationals have the same rights to live and work in the UK:

Austria Belgium BulgariaCroatia Republic of Cyprus Czech RepublicDenmark Estonia FinlandFrance Germany GreeceHungary Ireland ItalyLatvia Lithuania LuxembourgMalta Netherlands PolandPortugal Romania SlovakiaSlovenia Spain Sweden

5.4.2 Non-EEA Foreign NationalsFor applications to be considered, indefinite leave must be evidenced by a stamp in a currently valid passport or written confirmation from the Home Office. Where indefinite leave to remain in the UK is not granted, applications can be considered subject to meeting the following criteria:• Minimum 25% deposit which must be from the applicant's own

resources. Gifts and builder's cash backs are not acceptable; unless they are in addition to the 25% deposit provided from the applicants own resources

• Applicants must have been legally resident in the UK for at least the last 3 years

Applicants must have either Tier 1 or Tier 2 immigration status, the government definitions of Tier 1 and Tier 2 are as follows: • Tier 1 for highly skilled workers • Tier 2 for skilled workers with a job offerApplicants holding a Tier 2 dependent visa are unacceptable.Spousal visas will be considered on a case-by-case basis for joint applications where one of the applicants is a UK citizen.


https://www.foundationforintermediaries.co.uk/media/1232/document-certification-form.pdf

Applicants must have their salary paid into a UK bank account.

Foundation Home Loans will not consider lending where funds originate from the following countries:

Afghanistan AlgeriaBosnia and Herzegovina Democratic People's Republic

of Korea (DPRK)Ecuador EthiopiaGuyana IranIraq Loa PDRMyanmar Sri LankaSyria Trinidad and TobagoTunisia UgandaVanuatu Yemen

5.5 ExpatriatesExpatriates, defined as UK nationals living and working abroad are acceptable provided the application is in a limited company name (SPV).Currently acceptable regions are:

Europe - All EEA countries (except Bulgaria) and Switzerland

The Americas - USA and CanadaAsia/Middle East - Hong Kong, Singapore, Thailand, Malaysia,

Indonesia, South Korea & Japan Middle East - UAE

Austria Belgium SwedenCroatia Republic of Cyprus Czech RepublicDenmark Estonia FinlandFrance Germany GreeceHungary Ireland ItalyLatvia Lithuania LuxembourgMalta Netherlands PolandPortugal Romania SlovakiaIceland Norway LiechtensteinMalta Spain


Slovenia

In addition to this Ex-patriates:• Must have a credit footprint in the UK• Must be paying UK tax or have declared income for UK tax

purposes• Must have at least one BTL property in the UK• Confirmation in writing from the employer of the applicant’s

residential address in the foreign country and period of residency• Must have a UK bank account• Must have a UK correspondence address• Must provide the latest two years SA302 Tax Calculations (or HMRC

Online Tax Calculation acceptable in place of SA302)

5.6 Sanction SearchesPersons identified as appearing on UN and EU sanctions lists are not acceptable.

5.7 Embassy StaffEmbassy Staff are not acceptable.

6. SECURITY AND VALUATION REPORT

6.1 Security The security is the property in respect of which the mortgage is granted. It must be for buy to let purposes and not for the borrowers or an immediate family member to reside in.

6.2 Property Valuation Properties are subject to a minimum property valuation of £75,000.

6.2.1 Physical ValuationsA valuation must be carried out on every property undertaken by a valuer physically inspecting the entire property. Lending will be based on the lower of the purchase price or valuation. Valuations could reflect either furnished or unfurnished values as deemed appropriate at the point of underwriting.


The valuation will be carried out by a valuer on Foundation Home Loans’ approved panel of valuers.The valuation report is valid for six months from the date of issue.

6.2.2 Automated Valuation ModelsFor Portfolio landlords, automated valuation models will be used for property valuations and rental income verification on the borrowers existing portfolio.Where a suitable valuation cannot be obtained, further information will be sought from the borrower which may include:1. Details of the last valuation obtained2. Confirmation of the purchase price (for purchases in the last two

years)3. A new physical valuation 4. Verification of rental income through bank statements or copies of

AST

6.3 Letting

Any property purchased or re-mortgaged with Foundation Home Loans must be:

Other than for Short-Term Let products, the security must be let on an Assured Shorthold Tenancy (AST), or Company Let, not exceeding 36 months. Assured Periodic Tenancy Agreements are not acceptable

Short-term letting is only acceptable where the property is suitable for occupation under an assured shorthold tenancy and the standard rental coverage can be met

Short term lets/Holiday Lets & AirBnB are available on the STL products only. And lending will be based on the AST rental confirmed by the valuer

Up to four individuals are acceptable on a single AST Agreement Let within three months of completion of the mortgage, and remain

available for letting throughout the term of the mortgage Company lets are considered provided the ultimate tenant does not fall under unacceptable tenant definition in 6.4.Assured Periodic Tenancy Agreements are not acceptable. Properties where the annual rental income is expected to be in excess of £100,000 per annum are not acceptable.


6.4 Non Acceptable TenantsA property secured by a Buy to let mortgage may not be occupied by the borrower. In addition, the following are unacceptable as tenants:• Members of the borrower’s family• Asylum Seekers• Persons having diplomatic immunity• Persons who are sub-letting the property

6.5 Location and TenureOnly properties located in England and Wales will be considered. Properties in Scotland and Northern Ireland are not acceptable.Tenure may be Freehold or Leasehold. Foundation Home Loans does not lend on common hold.For leasehold properties, the lease must have at least 50 years remaining at the end of the mortgage term. For leasehold flats, borrowers who own the leasehold flat and whole of freehold title are acceptable, where both the leasehold and freehold titles are subject to first legal charge.For any other leasehold property, the freehold and leasehold titles must be owned by separate and unrelated entities.Borrowers who own the leasehold and a share of the freehold are acceptable, where the freehold is in a formal management structure or agreement.Crossover leases (Tyneside Flats) are acceptable.

6.6 Property LocationFoundation Home Loans monitors and controls the level of lending in areas and on developments and geographic monitoring is in place as follows:1. Maximum of three properties with Foundation Home Loans in any

one full postcode per borrower 2. Adjacent flats on the same level are not acceptable where they

have an adjoining wall and both are being mortgaged to Foundation Home Loans. We would only be able to consider one flat unless it can be evidenced that adjacent flats have a corridor, for instance, separating them. Then both could be considered by Foundation Home Loans


Where multiple applications in the same location are received, underwriters will consider: • Property location and the ease of obtaining multiple rental incomes • Whether any relationship exists between borrowers and/or the vendorAdjacent terraced or semi-detached properties with shared access and owned by the same borrower are unacceptable.Properties where customer separately owns adjacent land or access road will be considered on a case-by-case basis, where the borrower is not a first time Landlord.

6.7 Acceptable Security Subject to the valuer confirming that the individual property forms suitable security, the following property types are normally acceptable:

Freehold houses and bungalows of standard construction New build houses New build flats or newly converted flats less than 2 years after first

sale/conversion Leasehold flats and maisonettes (2 years after first sale and minimum 30

sq. m) Flats or maisonettes over commercial premises can be considered on a

case by case basis (where the borrower is not a first time Landlord) subject to:

o A maximum LTV of 60% (excluding fees)o No commercial food outlets immediately below the property

in the same, or adjoining buildings Modern timber framed construction (with external brick skin) Properties subject to a flying freehold, (We do not have a maximum

percentage we allow) they are subject to the valuer confirming that the presence of the flying freehold will not adversely affect saleability, and the solicitor confirming that the Title Deeds contain adequate rights of shelter and support plus arrangements for maintenance and repair

Local authority built houses (where the borrower is not a first time Landlord) where the valuation indicates good marketability

Ex Housing Association flats (where the borrower is not a first time Landlord) – security must already be in private ownership and the block above 75% in private ownership

Properties with more than 7 floors with a lift are acceptable where the valuation indicates good marketability and rental demand

Properties with two kitchens and/or multiple services can be considered on a case by case basis


Ex Local Authority Flats/MOD will be considered on a case-by-case basis (where the borrower is not a first time Landlord) and will also be subject to construction type, location with no balcony access and confirmation of a minimum of 75% private ownership from the local authority

Wimpey no fines (if constructed after 1946 and property is not bungalow or flat)

HMO identified by the valuer ( i.e. let to 3 or more individual persons ) which is not

Laing Easiform construction, if constructed after 1966 and property is not a bungalow or flat subject to mandatory (large HMO’s) or additional licencing by the local authority

Mandatory HMO’s, or those designated as requiring/having an additional licence by the local authority

Properties subject to selective licencing Properties with a sedum roof will be considered on a case by case basis Studio Flats with:

o Self-contained with a separate bathroomo Natural light requiredo Minimum size of 30 Sq. M

6.8 Unacceptable SecurityThe following types are considered unacceptable security:

Properties with unexpired lease term of less than 50 years at end of the mortgage term

Freehold flats and maisonettes Flats smaller than 30 Sq. M Shared ownership properties Basement flats (will be considered on a case-by-case basis where

property is located in London and over 30 Sq. M) Properties with more than 7 storeys with no lift Commercial properties Live/Work Units Properties subject to restrictions e.g. agricultural, retirement flats etc. Properties with more than five hectares/12 acres Properties with more than six bedrooms (8 bedrooms for HMOs) Properties under 10 years’ old without an acceptable structural defects

warranty as determined from time to time Properties where stage payments are required Unimproved/uninhabitable properties (no kitchen or bathroom) Prefabricated or large panel concrete construction (LPS) Pre-fabricated reinforced concrete construction (PRC) Concrete block construction designated Mundic


Properties of High Alumina Cement Mundic block materials BISF, Metal and Steel framed properties Any property designated defective under the Housing Act Properties of 100% timber construction Properties with ongoing structural movement or movement that requires

monitoring Underpinned properties where no guarantees are available Uninsurable properties or properties subject to an ongoing insurance

claim Properties on an un-remediated contaminated site or where the valuer

advises a possible contamination issue Properties where future saleability may be adversely affected by the

presence of electricity pylons, mobile masts or other forms of transmitter Properties likely to be adversely affected by local planning, e.g. road

widening Properties where an unsatisfactory Mining Search is received Grade I listed buildings Second homes/holiday homes Mobile homes and houseboats Properties originally purchased through Right to Buy that are still subject

to pre-emption Where the valuation report indicates: The interior/exterior condition of the property is poor and demand is poor The saleability of the property is affected by local factors and demand is

poor Multi-Unit Freehold Blocks with more than 10 units

6.9 New BuildsNew build houses are acceptable. New build flats or newly converted flats are restricted to a maximum 70% LTV. (Our definition of a new build flat is new build/newly converted/significantly altered or refurbished with less than two years since the first sale/conversion works).

Limits:• For an individual borrower the exposure limit is no more than 3 properties with a Foundation mortgage in an individual postcode• There will be an additional ‘Foundation’ lending limit (regardless of borrower) of no more than 5% of a single block of flats/development (subject to a minimum of 2 units) with a Foundation mortgageGeneral:


• ‘Significantly altered or refurbished’ is further defined as: ‘properties that have had structural or planning changes sufficient to change the occupancy or use class of the property’.• Criteria will exclude lending on properties within schemes and where restrictions apply, e.g.: o Section 106 restrictions o Keyworker/affordable housing schemes o Shared equity (which is within current policy)• For buy to let, interest rate coverage must reflect ground rent and service charges where these are deemed to be onerous by the valuer. A process will be in place to manage this following valuer’s comments.• Off plan: we will allow off-plan subject to a satisfactory re-inspection prior to funds-release, and any offer made on an off-plan basis is subject to a valuer’s initial assessment and underwriting at that stage.

6.10 Specialist ReportsThe Valuation Report may recommend that specialist reports be obtained or these may be requested by the underwriter.

6.11 Houses in Multiple Occupation (HMO) and Multi-Let Properties

HMO’s are not acceptable where:1. The borrower is a first time landlord2. There are more than 8 bedrooms in the property3. The property is currently occupied as a single dwelling4. The property fails to meet acceptable security as detailed in 6.7

Definition of a house in multiple occupation (HMO)

A house rented out by at least 3 people who are not from 1 “household” (e.g. a family) but share facilities like the bathroom, kitchen. Often called “a house share”. Examples of a HMO can include the following:• A house split into bedsits but not fully self-contained•A house or flat share where each tenant has their own tenancy agreement• Students living in shared accommodation

You must have a licence when renting out a large HMO. A property is a defined as a large HMO when it is:• Rented to 5 or more people who form more than 1 household• Tenants share toilet, bathroom or kitchen facilitiesDefinition of a multi-unit freehold block (MUFB)


A single building with multiple, separate self-contained, independent residential units owned under a single freehold title, meaning no unit is subject to a lease. This particular property type comes in a variety of configurations such as purpose built blocks of flats or houses converted into flats. They have the following characteristics:• Multiple units each fully self-contained with no shared facilities and their own AST agreement• Private areas that are the personal space of each resident/household into which no one else has right of access. i.e fully self-contained • Separate entrances to each unit resident/household• Some also have common areas that all residents/households have the right to use, such as a hallway or garden.

HMOs are acceptable up to 8 bedrooms and MUFBs up to a maximum of 10 units

Where required for HMOs, all appropriate Local Authority licences, mandatory, selective, additional , must be in place at completion. In view of the HMO changes introduced in October 2018 exceptions can be considered for properties already used on a HMO basis where the license has been applied for and evidence of the application acknowledgement can be provided from the local authority so that this does not delay completion.

When the HMO is subject to an Article 4 direction, confirmation that the property is operating under all terms of the direction is required.The minimum room size is 6.5sqm for a HMO. This is a local authority requirement.The minimum unit size is 30sqm for a MUFB.

On all HMO and MUFB applications our panel solicitors TWM or TLT must act for Foundation Home Loans. The applicants can instruct their own solicitors or TWM/TLT can act on a dual representation basis. Solicitors will be asked to confirm that they have had sight of all relevant licence(s) and the applicants are compliant with all Local Authority licencing requirements. Solicitors will also be asked to confirm sight of gas, electrical, fire alarm and smoke/heat certificates.

Large HMOs and MUFBs

HMOs with 7+ bedrooms (Sui Generis) and all MUFBs are classed as large HMOs/MUFBs and require the correct valuation fee to be paid. These are commercial valuation reports – sometimes called Red Book or Long Form valuations.


Multi-unit properties are not acceptable where:1. The borrower is a first time landlord2. The loan will not be secured against a freehold title3. One or more individual units are subject to separate leasehold

title4. The property fails to meet acceptable security detailed in 6.7

All special conditions relating to planning and licensing as detailed on the mortgage offer must be satisfied prior to the receipt of the Certificate of Title.

6.12 EPC RatingsAll properties must achieve a minimum EPC rating of E. Properties that do not meet this standard will subject to further underwriting with all offers made on condition of full remediation prior to receipt of the certificate of title with an updated EPC evidencing E or above has been achieved.

6.13 Retentions

Partial retentions are not allowed (If works are required and the valuer recommends a retention we will not be able to proceed until the works are satisfactorily completed and a re-inspection received)

100% retention is acceptable for new build properties only

6.14 Audit ValuationsFoundation Home Loans reserve the right to undertake an audit valuation.

6.15 Second Charges and Deed of PostponementAll second charge requests and deed of Postponements received during the process will be considered.

6.16 Power of AttorneyDocumentation executed under a Power of Attorney will be considered on a case-by-case basis.

7. SOLICITOR AND LEGAL INFORMATION


7.1 Acceptable Solicitors

7.1.1 Individual Applications/Standard propertiesFoundation Home Loans has an open panel of solicitors for all applications. We will therefore allow the borrowers’ solicitors to act on our behalf (as well as the borrowers) for both individual applications and limited company applications provided the following criteria can be met:

1. Registered on the Law Society website2. Have 3 or more SRA-approved managers (no licensed

conveyancers)3. Attained membership to the Law Society’s Conveyancing

Quality Scheme (CQS)Checks will be made to ensure that the borrowers’ solicitors meet all of these requirements. Where any of the above 3 requirements cannot be met, the borrower can continue to use their own selected firm to act on their behalf, but we will instruct one of our panel solicitors to act on our behalf. The legal fees for both firms will then need to be paid by the borrowers through their own funds.7.1.2Houses in Multiple Occupation or Multi Let PropertiesFor Houses in Multiple Occupancy and Multi-Unit Freehold Blocks, Foundation Home Loans will only accept dual representation from either TLT or TWM Solicitors.7.1.3Limited Company Applications for Standard PropertiesThe same rules apply as for Individual Applications for Standard Properties provided the firm of solicitors is experienced in Limited Company applications.

7.2 Legal Charge Foundation Home Loans requires a first legal charge over the property. Full searches are required we do not currently accept indemnity Insurance in place of searches for re-mortgages.

7.3 Possessory Title A title based on adverse possession or possessory title will be acceptable if the seller is or on completion the borrower will be registered at the Land Registry as registered proprietor of a possessory title. In the case of lost title deeds, the statutory declaration must explain the loss satisfactorily.Appropriate indemnity policy is to be put in place and requested via a special offer condition.


7.4 Acceptable New Build Warranties

Currently (as at Oct 2018) Foundation Home Loans accepts the following warranties;NHBCZurich MunicipalArchitect’s Certificate RIBA registeredChartered Building Surveyor’s CertificateRICS registeredPremier Guarantee - The certificate must not contain any reservationsBuilding Life Plans - We require confirmation from BLP that the sum insured is adequate when compared to the rebuilding costs. The certificate must not contain any reservations.BuildzoneBuild AssureCRL – CRL are no longer offering new policies, but will honour existing policies.

7.5 Frequently asked Legal Queries

The property is being sold by the personal representative of the owner. This means that the owner is deceased and the personal representatives (executors, trustees etc) are going to execute the transfer from the seller to the buyer (our applicant). This is acceptable providing probate has been granted.

Will Foundation Home Loans consent to a second charge being registered at completion? Providing the second charge does not involve repayments (which would affect the borrower’s affordability and must be taken into account at the underwriting stage) Foundation Home Loans will be happy to consent to the registration of a second charge, which will rank subsequent to Foundation Home Loans’ charge.

There is no right of way to the property - is this acceptable with an indemnity policy? This will not be acceptable with a policy because if there is a problem with the access i.e. the owner of the land over which access is required denies access then the property will be virtually worthless. If the solicitors secure a proper right of way by providing a statutory declaration for a period of 20 years or more then we may be able to consider as an exception with the indemnity policy.

The property is subject to a restrictive covenant which says, "that it can only be purchased by/transferred to someone who has lived and worked in the vicinity for a minimum of 3 years.” This is a substantial restriction that is likely to seriously limit/restrict saleability and


Foundation Home Loans will not lend on any property with restricted saleability so would be declined.Building Regulation approval - is this acceptable with an indemnity policy? If the works were completed for more than 10 years then this can be accepted with an indemnity policy. If the extension is more than 25% of the overall dimension of the house it should be referred to the valuer for comment. If the valuation is unaffected then we can accept this with the Indemnity policy.

The applicant owns the freehold as well as the leasehold - is this acceptable?

This is usually acceptable only if Foundation Home Loans are able to take a charge on both the freehold and leasehold interests.

8. USEFUL INFORMATIONIf you visit our website at www.foundationforintermediaries.co.uk you will be able to view the latest versions of the information below:

8.1 Current Turnaround Times

Updated on a daily basis on our website https://www.foundationforintermediaries.co.uk/

• Provides current service levels for DIP Review, FMA Review and Post review

8.2 Latest Product Information

Buy to Let Criteria Guide Buy to Let Product GuideResidential Criteria GuideResidential Product Guide

8.3 Useful Information Documents

Our FeesBuy to Let Document Submission RequirementsBuy to Let Tax RulesBuy to Let Top Criteria PointsConsumer Buy to LetExpatriates Buy to Let ApplicationsLimited Company Landlord GuideProof of Identity & Residency GuideSolicitor DetailsPortfolio Landlord Requirements


https://www.foundationforintermediaries.co.uk/document-library/?utm_source=packager-guide&utm_medium=document&utm_campaign=10088-document-library















8.4 Useful Forms

Direct Debit MandateShareholder Consent and Declaration FormPortfolio Landlord TemplateLimited Company Funding DeclarationGifted Deposit DeclarationDocument certification form Accountant’s certificate

8.5. Existing BorrowersI. Foundation Home Loans do not currently offer either Further

Advances or Product Switches following the expiry of a product.II. An existing Paratus AMC/Foundation Home Loans Limited

borrower must have operated their existing mortgage account for 24 months after completion in a satisfactory manner.

III. A remortgage from an existing Paratus AMC/Foundation Home Loans account will be considered subject to product availability and underwriting criteria at the time of application.

9. BROKER PORTAL USEFUL INFORMATION

9.1 Adding Notes to the Broker Portal1. Visit www.foundationforintermediaries.co.uk click Log In at the top

right hand side of the page2. Enter your Username and Password and sign in 3. Search for the application required










4. Click on the Reference Number for the application that you need to view

5. This will take you straight into the Summary page, as below:

6. On the Summary page click onNote

7. The following box will appear. Complete the Note Title and Note Details


8. Click on Save and the note will be added to the portal

9.2 Uploading a Document to the Broker Portal

1. Visit www.foundationforintermediaries.co.uk click Log In at the top right hand side of the page

2. Enter your Username and Password and sign in 3. Search for the application required

4. Click on the Reference Number for the application that you need to view

5. This will take you straight into the Summary page, as below:



6. On the Summary page you will find the section named Requirement Checklist, here you will find list of the documents that the underwriters have requested, for example:-

7. Click on the individual requirements to upload the document

APPENDIX I


CONSUMER BUY TO LET

Foundation Home Loans do not accept Consumer Buy to Let applications. To help you identify whether your client’s application is a Consumer Buy to Let application, please consider the below scenarios:

Scenario Consumer Buy to Let

Buy to Let

Re-mortgage of applicant’s current residence (including unencumbered) on a Buy to Let basis where the applicant does not own any other let property

X

Re-mortgage of applicant’s current residence (including unencumbered) on a Buy to Let basis where the applicant already owns one or more let properties

X

Re-mortgage of a property which was previously the applicant’s residence and is currently mortgaged but which is currently let on an Assured Shorthold Tenancy

X

Re-mortgage of an unencumbered property which was previously the applicant’s residence but which is currently let on an Assured Shorthold Tenancy

X

Re-mortgage of an inherited property on a Buy to Let basis which immediately prior to inheritance was occupied by the applicant or a related person and the applicant does not own any other let property

X

Remortgage of an inherited property on a Buy to Let basis which immediately prior to inheritance was occupied by the applicant or a related person and the applicant currently owns one or more let properties

X


APPENDIX II

43 | P a g e F o u n d a ti o n H o m e L o a n sB u y t o L e t P a c k a g e r G u i d e

Appendix III

Source Type Credit Policy Evidence RequiredGifted Gifte

d• Deposit directly to the Director or Shareholder of SPV from an immediate family member is acceptable.

• Deposit directly to SPV is not acceptable as the SPV is a separate legal entity and therefore has no immediate family.

1. Ltd Company Funding Dec Form this can be a Directors Loan or Shareholder Fund.

2. Bank Statement - Personal of the Director or Shareholders. Must show the gift being credited.

3. Gifted Deposit Declaration/Letter to individual.

Directors Loan

Loan • The cash contribution from each Shareholder must reflect the Shareholding.

• Monthly Loan Repayments declared on Ltd Company Funding Declaration Form, this payment must be deducted from the rental income figure.

1. Ltd Company Funding Dec Form.

2. Bank Statement - Personal.

Directors Loan

Equity

• The Directors Loan must reflect the beneficial ownership of the security.



Shareholder Funds

Cash • The cash contribution from each Shareholder must reflect the Shareholding.

1. Ltd Company Funding Dec Form. 2. Bank Statement - Personal.

Shareholder Funds

Equity

• The Shareholding must reflect the beneficial ownership of the security.



Inter Company

Loan • The Directors and Shareholders of both Limited Companies must be exactly the same.

• The Limited Company (Trading) supplying the deposit must be solvent and be able to provide the deposit without affecting the business.



2. Bank Statements - Trading Company or 3. Full Accounts showing either Shareholder Funds/Retained Profit.

Holding Company

Loan • The Holding Limited Company must be the only shareholder of the SPV.

• The Directors of the SPV and Holding Limited Company must match.

• The Limited Company (Holding) supplying the deposit must be solvent and be able to provide the deposit without affecting the business.



2. Bank Statements - Holding Company or 3. Full Accounts showing either Shareholder Funds/Retained Profit.

Holding Company

Cash • The Holding Limited Company must be the only shareholder of the SPV.





Holding Company

Equity

• The Holding Limited Company must be the only shareholder of the SPV.




Key: Examples / ExplanationCash This can be inheritance, savings, Pension Fund that has been drawn down, remortgage of another

property.Loan Lending money to a Limited Company (SPV) with an agreement in place to repay the loan.

Equity A common scenario is that the outstanding equity in the property is swapped for the shareholding in the Limited Company (SPV). A Director may also loan the equity they hold in a property. This is the same as Shareholder Funds.

Shareholders Funds

Funds that have been placed into the Limited Company in exchange for, or an increase in a share of that company.

Inter Company

The Trading Company is a Limited Company that has a separate SPV. The SPV will have the same Shareholders and Directors.

Holding Company

The Holding Company is a Limited Company that has a separate SPV. The SPV will have the Holding Company as 100% Shareholders, the Directors will match both companies.
