Lending Policy

Mortgages

Local knowledge. Mutual understanding.

Residential Lending Policy

Helping youunderstand ourmortgage policy

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Newcastle BuildingSociety offersmortgages to covermany situations.Residential mortgages are available for the followingpurposes:

n Purchase of a residentialproperty

n Remortgage of anexisting secured loan

n Capital raising

n Additional borrowingfor existing customers

n Scheme Transfers

n Self Build Mortgages(exclusively throughBuildStore FinancialServices)

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For a more detailed version of our lending policy,please access via www.newcastle.co.uk

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General Policy Information

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n Maximum Loan To Value’s (LTV’s) areproduct specific and may vary from timeto time.

n Minimum mortgage advance is £10,000 (or£1,000 for further advances), maximumadvance is £1m. Loans over £500,000 willrequire Executive approval and must besubmitted initially as a Decision in Principleby our mortgage sales team.

n In addition minimum/maximum loanamounts vary by individual product.

n Minimum repayment term is 5 years (or 3years for further advances) with amaximum loan term of 35 years.

n Minimum age for applicants is 18. Maximumage at the end of the mortgage term isrestricted to 75.

n Where the applicants are within 10 yearsof normal or expected retirement atapplication and the term requested willtake them into retirement then we must beprovided with documentary evidence thata pension is in place.

n For applicants who are within 5 years ofexpected retirement age and the termrequired takes them into retirement thensufficient post retirement income tosupport the advance throughout themortgage is required.

n All properties must have a minimumpurchase price or valuation (whichever islower) of £40,000.

n We will only accept applications on arepayment basis only. Loans on aninterest only or part interest only basis donot meet our lending criteria.

n Maximum number of applicants is 4although we will only assess income fromthe 2 highest earning.

n Applicants must normally have beenresident in the United Kingdom for aminimum period of three years. This canbe waived for Diplomatic Corps, amember of HM Forces, or employees ofinternational based companies, providingtheir family will be resident in the property.

n Non-EEA nationals will be restricted to75% LTV although a higher LTV may beconsidered on referral to an underwriter.In all instances we will require evidenceof indefinite leave to remain in the UK.Professional applicants on long termvisas with at least 2 years remaining, willalso be considered.

n The Society will use credit scoring todetermine whether to proceed with anapplication. This will be performed aspart of a Decision in Principle or whenthe application is received. The creditscore will either accept, decline or referapplications to underwriters for a manualassessment.

Applications will normally be declined inthe following circumstances:

n Current secured arrears or recenthistory of non payment;

n Current unsecured arrears or historyof delinquency in last 3 years;

n Any unsatisfied CCJ or defaultirrespective of amount (£);

n Any registered CCJ or default foundon credit report in last 3 years;

n Any insolvency i.e. Bankruptcy or IVAis detected; and

n Any evidence of previous or currentproperty being repossessed.

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Maximum Loan to Value LimitsLoan AmountUp to £350,000

£350,001 - £500,000£500,001 - £750,000£750,001 - £1,000,000

Maximum Loan to Value*95%90%80%75%

*Please refer to specific product details for maximum LTV.

n All applicants must fund their depositfrom their own resources however gifteddeposits from relatives may be alloweddependant on individual circumstances.(The Society reserves the right to havesight of the source of deposit).

n Remortgages for capital raising purposesare restricted to 80% LTV. Capital raisingis described as anything other than thereplacement of a home purchase loan ora loan for purposes of current homeimprovements.

n Second homes/holiday homes must bestrictly for the sole use of the borrowerand dependent family members and mustnot be let. The maximum loan to value forsuch properties is 75% and the applicantsfinancial status must be sufficient to coverboth loans (i.e. mortgage on first propertyplus new mortgage).

n Let to Buy applications are restricted to75% LTV although a higher LTV may beconsidered on referral to an underwriter.In addition, we will require a evidence ofconsent to let from existing lender or thebuy to let offer along with confirmation ofexpected rental income from a ARLA/NLAregistered letting agent. The expectedrental income must cover our rental stresstest of 120% of a fixed 5% on an interestonly basis.

n Borrowers with existing investmentportfolio’s will be considered up to 95%LTV providing that the rental incomecovers at least 120% of the currentmortgage payment. We would alsorequire sight of tenancy agreements,proof of mortgage payments and aportfolio summary for those with anumber of loans.

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Self Build MortgagesWe offer self build mortgages exclusively via BuildStore Financial Services who can be contactedon 0845 223 4888. Alternatively, visit their website www.buildstore.co.uk for more details. Weoffer self build mortgages on the following basis:

n Where applicants wish to buy land and build a new property, convert an existing property ordemolish and rebuild an existing property

n We will consider lending up to 80% LTV to purchase land / property and up to 80% of cost ofeach stage during the build / conversion / renovation subject to valuation

n Funds are released on an arrears stage payment basis

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Up to and including 80% LTV* Over 80% LTV*

Employed New Borrowers & NBS Homemovers(porting / new product)

n 1 payslip dated from the last 2 months

Further Advance

n 1 payslip dated from the last 2 months

For both new and further lending, thelast P60 will be required where overtime/ bonus / commission is required toestablish track record.

New Borrowers & NBS Homemovers(porting / new product)

n 3 most recent payslips and latest P60

Further Advance

n 3 most recent payslips and latest P60

SelfEmployed

New Borrowers & NBS Homemovers(porting / new product)n Last 2 years certified/audited business

accounts OR

n An accountants reference confirmingincome OR

n Tax assessments

Further Advance Max 80% and less than25K additional borrowing

n Last 1 years certified/audited businessaccounts OR


n Tax assessments

n If over 80% and/or more than 25K thenrevert to 80%+ verification opposite.

New Borrowers & NBS Homemovers(porting / new product)


n Last 2 years tax assessments whereaccounts have not been prepared andsigned by a professional qualifiedaccountant AND

n Projection for the current year

Further Advance



n Last 2 years Inland Revenue taxassessments

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Income Assessment Requirements

*Please refer to specific product details for maximum LTV.

Affordability Assessmentn The Society no longer assesses your borrowing capacity through income multiples and has

developed a new Affordability Calculator which is now more tailored to your individualcircumstances. Assessment of how much you can borrow is now calculated through a combinationof your income, regular commitments and household/lifestyle expenditure.

n To see how much you could borrow please visit your local branch or contact our Newcastle DirectTeam on 0845 606 4488 where one of our experienced mortgage advisers will be able to assist.Please visit our affordability calculator via our website: www.newcastle.co.uk

n To ensure that your assessment is as accurate as possible please can you provide our advisers withas much information regarding your personal income and expenditure as possible. Information onmonthly expenditure such as council tax, utility bills, insurances and loans/credit card commitmentswill need to be provided.

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The following points will be takeninto account when consideringthe applicants' ability to meetmortgage payments:

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n Applicants who have fixed term contractswithin professional occupations such asdoctors, teachers and solicitors, will beregarded as in permanent employment.Applicants from contract workers in otherfields will be considered on theirindividual merits.

n Foreign national applicants (nationals ofall EEA countries) are expected to haveresided in the UK for at least 3 years andthis can be verified (via credit search oneither voters roll or through CAISinformation) along with 6 months bankstatements.

n Proof of payment for the preceding 12months is required where the applicanthas had a previous mortgage or hasbeen a tenant and the data is notavailable via a credit check.

n For all forms of additional income whichis being taken into account, documentaryevidence will be required.

n Guarantors are acceptable to the societysubject to a maximum LTV of 95%.Applicants generally need to be able tosupport mortgage payments but we willconsider split applications where theapplicant can afford at least 50% of themortgage required. The guarantor mustbe a close family relative (parent, child,grandparent) and needs to be fully awareof their commitment and potential liability.It is a requirement that they takeindependent legal advice.

n In assessing affordability all unsecuredloans that have more than 6 months torun, credit cards and maintenance will bededucted. In addition, deductions willalso be made for declared householdand lifestyle expenditure which iscompared against statistical data foraccuracy. The stress rate applied foraffordability is our current standardvariable rate.

n In all mortgage applications the applicant’sincome will be assessed. We do not offerself certification or non-verified statusmortgages.

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n In the event that the applicants are notregistered on the electoral roll, they mustsupply proof of residence. Any utility bill,council tax bill, voters roll enquiries, bankstatements or mortgage statements areacceptable, provided the originaldocuments are supplied and they arefrom within the last 3 months.

n The Society will be required to confirmidentity. Acceptable documents includea, passport or driving licence or a recentbank statement.

Identification RequirementsThe following information is required in support of amortgage application:

Property Informationn The Society will make advances on any

acceptable security in England,Scotland, Wales, Northern Ireland.

n Properties in Scotland still require atranscript of existing report from theapplicant on the proviso that the valuer ison our panel and the transcript isaddressed to NBS. Alternatively, we willinstruct our panel valuers.

n The tenure of acceptable properties willbe freehold or leasehold in England,Wales and Northern Ireland or theirScottish equivalent.

n All properties must be assessed by asuitably qualified valuer with sufficientprofessional indemnity cover. Allvaluation instructions (with exception ofScotland) will be made by the Society viaour nominated panel. 3rd partyinstructions are not acceptable.

n We will consider new build homes up to90% LTV and flats up to 80% LTV. Therewill be no allowance for incentives. Themaximum LTV will be calculated on thelower of the purchase price or valuationless any incentives listed on the CMLdisclosure form. We reserve the right torestrict exposure to new build sites.

n We will consider applications where theproperty has solar panels installed byreferral to underwriters. Where the solarpanels are installed on roof space undera 25 year lease then the provider must beaccredited with via the MicrogenerationCertificate Scheme and there must be noonerous conditions contained within theagreed lease. In all instances there mustbe an agreement to allow the Society toremove the equipment at no cost.

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Properties we are unable to lend onn "Flying-freehold" - if more than 25% of property involved.

n Houses with rooms let or likely to be let to several tenants where premises have not beenconverted or constructed for this purpose.

n Properties that have an unexpired lease of less than 70 years at the start of the mortgage.

n Unmodernised flats and flats which are above commercial premises.Exceptions can be made for exclusive developments and certain areas of larger British citieswhere the valuer has confirmed that there is a ready and sustainable demand.

n Studio flats are normally unacceptable but may be considered in prestigious developmentswhere a ready and sustainable demand exists.

n Large old unmodernised houses where accommodation is in excess of the applicant'srequirements, particularly where there are attics and/or basements.

n Back to Back houses with exception of M62 corridor.

n Council houses built in a non-traditional way, i.e. prefabricated reinforced concrete.

n Ex-Local authority flats where LTV will exceed 50% (except Scotland).

n Freehold flats with the exception of ‘Tyneside Flat’ style.

n All flats over 4 storey and greater than 20 flats

n Houses with restrictions to ownership(e.g. retirement flats, restrictions on occupation to local inhabitants). This list is notexhaustive and any application where there is a restriction should be referred to anunderwriter.

n Homes purchased under Shared Equity / Ownership Schemes (UK only) will not beacceptable where a sales restriction / charge will remain on the property despite theborrower owning a 100% share. In addition, we will not consider any application where theborrower is looking to remortgage to the Society and capital raise to purchase an increasedshare in the property.

n Mobile homes or caravans.

n Houseboats.

n Uninsurable properties e.g. due to flood risk.

n Uninhabitable properties(e.g. no kitchen/bathroom/roof/mains services not connected).

n Properties with invasive plants (i.e. Japanese Knotweed) within the curtilage of the property.

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Acceptable IncomeWe will accept 100% of:-n Basic income

n Service/state/private pensions and annuities

n Maintenance Order (CSA / Court Order enforceable)

n Car allowance

n Pay rise pending (must be within 3 months and employer to confirm)

n Mortgage subsidy (must be permanent)

n Housing allowance

n Additional investment income from rental portfolio(evidenced by accounts / tax assessment / accountants reference)

n London / Large City allowance

We will accept 50% of:-

n 2nd job with 12 months service(will accept 100% where 2 part-time jobs are full-time equivalent)

n Working family tax credit / Family tax credit / Universal credit

n Overtime / bonus / commission / shift allowance(2 years P60’s will be required to evidence track record)

We will not considern Unemployment benefit / income support

n Child benefit

n Social security payments that are not guaranteed for life (DLA etc)

n Seasonal work

n One off payments

n Gratuities not sighted on payslips

n Bursaries and scholarships

n Investment or Trust Income that is not guaranteed

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Valuation FeesAlternative or additional fees may be charged forspecial schemes, please refer to specific productpages for details.

Valuation of Property

Up to £100,000

£100,001 to £200,000

£200,001 to £250,000

£250,001 to £300,000

£300,001 to £400,000

£400,001 to £500,000

£500,001 to £600,000

£600,001 to £700,000

£700,001 to £800,000

£800,001 to £900,000

£900,001 to £950,000

£950,001 to £1,000,000

Over £1,000,000

HomebuyersFee*

£390

£455

£520

£520

£605

£690

£730

£810

£890

£970

£1,050

By negotiation

By negotiation

StructuralFee*

£470

£560

£650

£650

£740

£830

£940

£1,050

£1,160

£1,270

£1,380

By negotiation

By negotiation

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StandardFee*

£240

£265

£290

£315

£340

£415

£490

£565

£640

£715

£790

£790

By negotiation

*All of the above fees include an administration fee to the Society of £125.00

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Generaln All the enclosed conditions apply to

wholly residential lending.

n The Society reserves the right to rejectany application where the borrower hasany convictions or pending prosecutionsrelating to financial misdemeanour ordishonesty.

n These guidelines outline the mainelements of the Society's residentiallending policy, but are by no meansexhaustive.

n In the interests of security, we may fromtime to time record telephone calls to andfrom us.

n For clarification of any aspect of ourpolicy, or a full written quotation, pleasecontact us on 0845 606 4488.

n A first charge will be required as security.All mortgages are subject to status andvaluation. APR's are typical and variable.

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Principal Office: Portland House, New Bridge Street,Newcastle upon Tyne NE1 8AL.Newcastle Building Society is authorised by the Prudential Regulation Authority and regulated by theFinancial Conduct Authority and Prudential Regulation Authority. Newcastle Building Society is enteredin the Financial Services Register under number 156058. We are permitted to advise on, arrange, enterinto and administer mortgages and permitted to advise on, arrange and administer general insurance.You can check this on the Financial Services Register or by contacting the Financial Conduct Authorityon 0800 111 6768. A first charge over your property will be required as security.

Details are correct as at time of print (August 2013) DEV100

YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE.

Call:

0845 606 4488Monday to Thursday 8am to 8pm - Friday 8am to 6pm - Saturday 9am to 1pmCalls may be monitored and recorded for training and security purposes.

Or visit us online:

www.newcastle.co.uk

Your local branch details:

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Lending Policy

Documents

Transcript of Lending Policy