Newbury Building Society

Applicants
Maximum loan amount
· Employed applicants
· Overtime/commission/bonuses
· Self-employed applicants
· Affordability
Mortgage term
Mortgage repayment
Property type
· Tenure
· Construction
· Value
· Self-build
Solicitors

These pages are designed to give you some guidance on our mortgage lending criteria. We are committed to being flexible in our approach to mortgage lending. We look at each case on an individual basis, so if your circumstances do not appear to fit our criteria, and we will endeavour to help you.

Please also read mortgages explained for a general explanation of mortgages and related topics and the terms of our mortgage products under buying your home or remortgages.

Applicants

You need to be employed or self-employed, resident in the UK (and have permanent rights to reside in the UK) and be aged at least 18 years old to qualify for a mortgage. We do consider applicants with income from pensions and other investments, depending on the applicant and the mortgage proposition. All mortgages are subject to status.

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Maximum loan amount

The amount that you can borrow is generally based upon your income and on the purpose of your borrowing.


Employed applicants

We take your annual gross salary and apply an income multiplier to see how much you can borrow. Income multipliers do change according to market conditions but currently they are:

*'LTV' stands for 'Loan to Value'. If you are buying your home, the loan to value percentage is calculated by dividing the amount of loan you require by the lower of the value and the purchase price.  If you are switching your mortgage to us and staying in your existing home, the loan to value percentage is calculated by dividing the amount of loan you require by the value.  If you are switching your mortgage and would like to raise additional funds for anything other than home improvements the maximum loan to value is 85% for loans up to £250,000.

Due to the volatility of the property market, all loans on properties in London are restricted to 85% of the current valuation.


Overtime/commission/bonuses

We will include up to 50% of overtime/commission/bonus as part of your assessable income. We take into account whether this additional income is of a regular nature and also consider the proportion of basic pay the overtime/commission/bonus represents before including it. £1,000 is added to assessable income for a company car (one per application).


Self-employed applicants

The same income multiplier and affordability policy is used for self-employed applicants as employed. The last three years' accounts are required to review business performance and income is calculated using the last two years' average net profit. The accounts must be prepared by a chartered or certified accountant. If your accounts are not prepared by a chartered/certified accountant, then we will need to see tax assessments.


Affordability

We take a responsible approach to lending to ensure that you are not overstretching yourself, so we will take into account your loans and other outgoings when considering how much we can lend to you.  All credit commitments will be grossed up by 42% and deducted from income prior to applying income multipliers.

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Mortgage term

The minimum and maximum mortgage terms are 5 and 40 years respectively. The term of years may be restricted if your age and retirement date make this appropriate. As a result of this restriction the income multiplier may also be reduced.

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Mortgage repayment

You can repay your mortgage by paying the capital and interest each month or paying interest-only. If you opt for interest-only, we will ask you to tell us how you are planning to repay your mortgage at the end of the term, which may be through an investment policy such as:

• Edowment policy
• Pension
• ISA (individual savings account)

Life assurance does not automatically come with your mortgage, unless you have an endowment policy in place. If you have any other kind of mortgage, you should consider taking out a life assurance policy to ensure your family is protected in the event of your death.

Income protection is a longer term insurance, which is tied to your salary rather than your mortgage. It does not cover unemployment but does cover inability to work due to ill health. Many people consider what may happen to their family should they die but not if they could not work due to ill health.

Borrowers with interest only loans will be reminded annually of the need to for them to ensure that there is an adequate repayment vehicle in place to repay the loan at maturity.

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Property type

We will carry out a valuation of the property you are buying/remortgaging, to ensure that it is acceptable security for the mortgage you are applying for. The property must be located in England or Wales.   We do not lend in Scotland due to the different property laws.


Tenure

We lend on freehold houses and leasehold properties with a lease 30 years remaining at maturity of the mortgage. Leasehold flats in blocks of more than six storeys are not acceptable.

We lend on ex-local authority houses but not ex-local authority flats.

If you are buying/remortgaging a converted flat, leasehold flat over a commercial premises or a property with an agricultural tie, please seek advice from us.


Construction

All properties of conventional construction (brick and tile) are generally acceptable.

We do not lend on timber or concrete properties.


Value

Our minimum property value is £40,000. There is no maximum.


Self-build

Self-build proposals will be considered from applicants who are building in the local area and being assisted by qualified tradesmen. For properties under construction we will usually release the mortgage monies in stages. Our normal policy is to release the loan in four equal stages as follows:

More or less stages can be considered depending on your needs.

If you need assistance to purchase the land in the first place, we will lend 50% of the current market value of the land as long as full planning permission and building regulations to build the property has been obtained.

All properties that have been built within the last ten years or are currently being built must have the benefit of an NHBC certificate or a Zurich Municipal policy. If neither of these policies is available we will accept the property as security for your mortgage if it was supervised by a qualified architect (ARIBA/FRIBA) during construction. We will need to place the original certificate/policy in the title deeds to the property.

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Solicitors

Generally we will use the same solicitor as you, providing they are registered in Butterworths' Law Directory and the firm has three or more partners. If there a conflict of interest arises during the process, then we would need to employ our own solicitors at your cost. This situation happens very rarely.

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