Lending Criteria

1. General criteria

2. Applicant details

3. Rental assessment

4. First time landlords

5. Portfolio landlords

6. Houses in Multiple Occupation (HMO)

7. Green further advances

8. Source of deposit

9. Property restrictions

10. Limited Companies

1. General criteria

Term

Minimum: 5 years

Maximum: 35 years

New business application submission

Applications should be submitted through a Nationwide Buy to Let (BTL) Mortgage Consultant via telephone.

Loan purpose

• Purchase or remortgage in England, Wales and mainland Scotland
• Remortgages acceptable after the property has been owned for a minimum of six months
• Raising capital for non-business purposes including for deposit/purchase of a Buy to Let property, will be considered
• Raising capital for non-structural home improvements will be considered
• Remortgages with no capital raising may require proof of the current mortgage balance e.g. the last mortgage or redemption statement.

Further advances

• May be considered after a minimum of six full consecutive monthly payments have been made. Subject to revaluation in all instances. The minimum amount is £2,500 (unless otherwise stated).
• If your client is over the age of 70 and the LTV is over 65%, we’ll only consider applications for essential/structural repairs to the security.

Offer validity

All mortgage offers are valid for six months from the date of 1st offer.

Capital repayment

A lump sum or regular overpayments of up to 10% of the initial mortgage balance can be paid in each 12 month period, from the anniversary of completion, without having to pay any early repayment charges. This isn’t available if the whole loan is being repaid or security released.

Assets held by the customer for repayment of the mortgage are not acceptable where it is denominated in a currency other than pounds sterling (GBP).

Tenancy agreements

• Accepted in the form of an Assured Shorthold Tenancy Agreement (Occupation Contract in Wales, Short Assured Tenancy and Private Residential Tenancy (PRT) in Scotland) for a period of up to 36 months*, all tenancy agreements are subject to assessment by the conveyancer acting on behalf of the client to ensure adherence with the UK Finance guidelines. (*We will accept tenancies in a PRT form in Scotland and the 36 month period will not apply to those tenancies).
• Multiple tenancy agreements for a single property are acceptable for all applications, regardless of whether a Standard Buy to Let (up to a maximum of 4 tenants) or House in Multiple Occupation (HMO).
• Purchase applications where existing tenants will remain in the property are accepted, subject to a new tenancy agreement being signed on completion or the conveyancer confirms the benefit of the AST is
  transferrable to the borrower as a successor in title to the original landlord
• Evidence of rental payments and a copy of the tenancy agreement may be requested to support non-standard tenancies
• Non-Assured Shorthold Tenancy Agreement applications (Local authority/Housing Association Tenancy, Corporate Tenancies and private individuals where annual rent exceeds £100k) also considered up to 36 months
• Corporate lets are considered for use by the company’s employees where the company employs more than 1,000 staff and is based in the UK
• Tenancy agreements paid in cash are generally acceptable if supported by evidence of rental payments
• We won’t lend to an applicant if they have an immediate family member renting the property
• Premium lease agreements (tenancies where a proportion of the rent is paid upfront) considered subject to the following LTV limits:

Changes of security address

For changes to the security address during the application process, a new application will need to be submitted. Products and criteria at the of re-submission will apply.

Portability

Porting applications are not currently accepted via this channel.

Private sales

• Confirmation as to how the applicant sourced the property
• Private sales are acceptable but we would expect there to be an immediate link between the applicant and the vendor e.g. work colleague/friend/neighbour
• Inter-family sales are unacceptable

• Please let us know if there are any incentives
• Properties being purchased for more than 10% below the market value will not be considered
• This doesn’t include properties purchased from a recognised developer and the discount/incentive can be evidenced.

Sale and rent back

It is not permitted for the vendor to remain as a tenant in the property or to retain an interest in the property.

Property Investment Clubs/Companies

Applications to purchase properties sourced via Property Investment Clubs/Companies are not accepted.

Property

All Buy to Let properties must be used for residential letting purposes only and be in a lettable condition to be determined by the Valuer.

Properties not owned in personal name(s)

Applicants purchasing/transferring a property not owned in personal name(s) accepted providing they fall within one of the following categories:

• Local Authority/Housing Association owned properties
• Properties where the owner is a lender listed in the UK Finance Mortgage Lenders’ handbook
• Properties owned by limited companies where the purchase is an open market transaction and the applicant has no links to the vendor

Second charge

New applications with existing second charges are not accepted (unless repaid as part of the transaction). Consent to second charges post-completion considered on a case by case basis. This will be subject to criteria at the time of application, including rental cover assessment and LTV limits (currently 50% LTV before adding second charge).

Maximum loans per individual property

Maximum overall exposure per application

Minimum loan

£25,001 (unless otherwise stated); £2,500 for Further Advance applications.

Maximum loan on Green Further Advance

£15,000

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2. Applicant details

(applies to all products, unless otherwise stated)

Applicants

• Up to two applicants accepted per application
• First Time Buyers considered when accompanied by an existing property owner (First Time or Experienced Landlord)
• Buy to Let Guarantors not considered
• The mortgage introducer cannot also be the applicant
• Vendor cannot be a relative of the applicant
• Regulated Buy to Lets (where the property will be occupied by the borrower or a member of the borrower’s immediate family, now or in the future) are not accepted

Applicant definitions and acceptable combinations

Applicant definitions

• First Time Buyer (FTB): An applicant who has not owned and occupied their own home for the last six months and has not owned and let a Buy to Let property for the last six months
• First Time Landlord (FTL): An applicant who has owned and occupied their own home for at least the last six months, but has not owned and let a Buy to Let property for the last six months
• Experienced Landlord (EXPL): An applicant who has owned and let a Buy to Let property for at least the last six months (they may or may not own and occupy their own home)

*First Time Buyer (FTB):

• Will be considered subject to additional underwriting
• The First Time Buyer (FTB) must be accompanied by a current homeowner or Experienced Landlord (EXPL)

Examples of scenarios which may impact acceptance of the application include:

• The FTB is unable to prove that they can support the mortgage from their own income
• The deposit is wholly gifted by the 2nd applicant / other party (no deposit from own resources, unless gifted by partner)
• The FTB lives in a property of similar value (rented or with parents)
• The FTB is not purchasing with spouse / partner.

Residency

UK residents only:

• Applicants with a previous address abroad in the last three years are not accepted.
• Applicants who work or live outside of the UK for all of the year at the time of application are not acceptable. However, exceptions can be made for applicants who work or live outside of the UK for part of the year, subject to underwriting assessment. The maximum loan to value may be restricted to 70%.

Foreign nationals must:

• Be a resident in the UK for at least three years prior to application
• Have a UK bank account
• Have permanent right to reside. Exceptions can be considered for applicants without permanent rights to reside, subject to full underwrite
• LTV restrictions may apply

Age

For joint applications:

• We'll use the age of the eldest applicant
• There's no maximum age for a First Time landlord, when applying with an Experienced Landlord at 65% LTV or less

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3. Rental Assessment

Interest Cover Ratio (ICR)

To reflect the different taxable income levels of applicants, we have a range of ICRs that are applicable dependant on the customer and/or application. The gross rental income, confirmed by the valuer, must cover the monthly mortgage interest payment by at least:

125% ICR:

Applies to Limited Company applications (except HMO) and those in personal names where the following criteria is met:

• Applicants declare themselves to be Lower rate taxpayers and;
• Declared annual income is less than £50,271 per applicant, upon completion of the mortgage (less than £43,662 gross income in Scotland)

We will take into account the following in our assessment of an applicant’s overall income:

• 75% of all rental income (including existing and proposed BTLs with The Mortgage Works)
• 100% of all other sources of income.

To qualify for the 125% ICR, applicants can have no more than 3 rental properties (with or without a mortgage), including any The Mortgage Works applications in progress. For purchase applications we will add 75% of the new property’s proposed gross rental income to the applicants’ annual income. For joint applications, we will add half of the 75% proposed gross rental income to each applicants’ annual income.

In order to validate that all applicants are lower rate taxpayers and income meets the policy above, we'll require proof of income in the form of the latest SA302. The only acceptable SA302 should cover the years 2023/24. Or tax calculation and the accompanying tax year overview dated within 18 months of the date the proofs are uploaded. See table below. 

Any applicant that has recently left employment, retired or started self employment will need to be treated as a higher rate tax payer.

165% ICR:

• Applies to applicants who don’t meet the criteria above.

175% ICR:

• Applications for Houses in Multiple Occupation (HMO) regardless of tax status.

*21% or less Scotland

When calculating the maximum borrowing, this will include any product fees you want to add to the loan. If the product fee is being added to the loan, this can exceed the maximum LTV. But it can’t exceed the maximum loan amount.

Stress rates

To check affordability, we apply the following stress rates:

*Please refer to the ICR section for more information on the ICR applicable on your application.

For further advances individual loan elements will be stressed separately in line with the above. However, the stress rate applied to existing lending will also be set to a minimum of the stress rate applicable to the new borrowing.

Additional information:

• Rental income denominated in a currency other than pounds sterling (GBP) isn’t accepted.
• For applicants whose total BTL lending with the Nationwide Group BTL will exceed £1m on completion, an assessment will be made on any existing and proposed BTL properties to ensure sustainability (regardless of the number of properties). A stress rate of 5.25% and ICR of 145% will be applied to the client’s existing and proposed BTL properties, alongside a maximum aggregate LTV of 65%.

Minimum personal income requirements

None

Personal income

Whilst there is no minimum personal income requirement, proof of personal income may be requested to support an application. This will be used in conjunction with other information relating to the applicant and property, to validate that the Buy to Let loan will be used for its intended purpose.

Where applicants are using the 125% ICR, proof of income is required. We reserve the right to request proof of income on any case to support assessment of the application (e.g. high levels of unsecured debt, Nationwide Group BTL exposure over £1m).

Eligible income is defined as:

• Gross earned income (excluding bonus, overtime and commission)
• Pension income

Acceptable proof of income:

• Self-employed applicants: Latest SA302 (self-assessment tax calculation form)
• Employed applicants: Latest payslip
• Retired applicants: Latest payslip/pension statement

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Classified as an applicant, who has owned and occupied their own home for at least the last six months, but has not owned and let a Buy to Let property for the last six months.

• Evidence of deposit is required on all applications. See ‘Source of deposit’ (section 8)
• The loan purpose will be to purchase a new Buy to Let property
• Maximum age 70 at application (unless a joint application with an Experienced Landlord and below 65% LTV - see Age criteria in section 2)
• Maximum 80% LTV
• First Time Landlords remortgaging a second residential property as a Buy to Let (for example, inherited property) are not accepted

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5. Portfolio landlords

The Mortgage Works’ portfolio landlord definition

A portfolio landlord is a borrower with four or more distinct mortgaged Buy to Let UK rental properties (or seven or more for remortgage applications without capital raising).

Additional information:

• This includes properties owned through a limited company, ‘consent to let’ properties and all Buy To Let mortgages owned solely or jointly by the applicant(s)
• We won’t consider foreign properties when assessing portfolio landlords.

Affordability assessment

We’ll continue to check all new The Mortgage Works mortgage applications to ensure your client can cover their monthly mortgage interest payment.

We’ll also assess the existing portfolio to ensure the overall aggregate LTV and ICR is sustainable. The assessment will be based on the entire portfolio, including the new property and any rental properties without a mortgage.

The following rental calculations and maximum LTVs will apply across your client’s portfolio:

Packaging applications

Portfolio landlords with 11 or more mortgaged Buy to Let properties need to provide three months current account statements showing rental payments for their portfolio.

All portfolio landlords will need to provide a property schedule, either by:

• Keying in the details into our Portfolio Portal
• Or completing our property schedule form and uploading into the portal.

Once submitted, the details will be automatically validated and the results will be sent to our dedicated team of underwriters for assessment. Depending on case complexity and portfolio size, we may request further supporting information such as a business plan.

So your case can be processed efficiently, please submit all requested proofs and additional supporting information but only when this is asked for.

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6. Houses in Multiple Occupation (HMO)

The Mortgage Works consider the following types of property as a House in Multiple Occupation:

• A property occupied by five or more people
• A property with five to seven lettable rooms in an area commensurate with multi letting

Properties subject to selective licencing are only classified as HMO where at least one of the above conditions are met.

Please see the HMO section of the product guide for available options.

• Minimum property value is £100,000
• Maximum 75% LTV
• Landlord experience: at least two years as a standard BTL landlord or one year as a HMO landlord
• Let to Buy applications not accepted
• Rental cover will be assessed on a multi-tenanted basis
• All let properties will be subject to an Assured Shorthold Tenancy agreement of a minimum of six months, maximum of 36 months. Single and multiple tenancy agreements accepted
• A property must have no more than four habitable storeys and no more than one kitchen
• Properties consisting of more than one self-contained unit under a single title are not acceptable
• The property must offer a communal living room. A large open plan kitchen/living room if it’s big enough to meet reasonable occupant needs can be considered a communal room.
• A Specialist Security valuation will be required.

Please note that the status of a property as an HMO will be determined by the valuer.

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7. Green Further Advances

Green Further Advance products are available to existing The Mortgage Works customers who will be making Green improvements to the security property:

• Considered where 100% of the further advance funds will be used for acceptable green purposes (See below). If additional funds are also required for other purposes, a standard Further Advance product will need to be selected.
• The property must have a valid Energy Performance Certificate (EPC) in place at application. If the EPC rating for the security is F or G, the product can be used to improve the properties rating to the minimum standard.
• Maximum loan of £15,000 per property
• Maximum Loan to Value of 75%
• Available on Buy to Let, Limited Company and Large Portfolio product ranges only
• We reserve the right to conduct post completion checks to ensure works have been completed.

All other criteria will follow standard Further Advance policy. Acceptable green purposes are:

• Solar panels
• Traditional insulation
• Pipe and boiler insulation
• Boiler upgrade
• Window upgrade/replacement
• Air source heat pumps
• Investment into rain water ‘harvestation’
• Upgrading of existing utilities
• Small scale wind turbines
• Electric car charging stations

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8. Source of deposit

The Mortgage Work reserve the right to request evidence of deposit on all applications.

Where evidence of deposit is requested, a minimum of one month’s bank/building society statement(s) (dated within the last three months) is required:

• If the deposit funds have been in the account for at least one month or the deposit is not in the form of a gift, then no further checks will be required.
• If the deposit funds have been in the account for less than one month, we may require further evidence from savings, gifts and/or equity and will be requested as follows:

Applicant's own sources (Savings)

Gifted deposit

• Gifts will be classed as monies deposited into the customer’s account within the last 12 months. Funds which have been in the client’s account for more than 12 months will be treated as savings.
• Donors must be at least one of the following: an owner occupier or experienced landlord, a spouse/partner living in the same residence or have savings above the deposit amount required.
• Maximum of two gifts per application. Two gifts may involve more than two donors where the gift comes from a joint source, e.g. one gift from mother and father and one gift from grandfather and
  grandmother.
• Gifted deposits will not be accepted where the donor resides outside of the UK and/or the funds originate from outside the UK.
• For Gifts over £10,000 and up to £50,000, a signed Confirmation of Gifted Deposit form from the donor (must be dated within the last three months) is required.
• For Gifts over £50,000, one month’s bank statements from the donor showing available funds will also be required.

Equity

If a property has been sold, remortgaged (including Further Advances) or is to be sold, the following is required:

• Address of property being sold or remortgaged
• Confirmation from solicitor that the deposit is being sourced from that property
• How funds are being released

If the property is held jointly with someone not party to the application, a gift letter (The Mortgage Works template) is also required, except in the case of divorce/separation where a letter detailing the source and amount of funds is needed from the solicitor dealing with the separation.

UK Limited Company

Accountants letter from Limited Company confirming how the monies are being released and that the Limited Company and all shareholders will have no interest in the security property.

Inheritance

• Confirmation from solicitor of the amount that is to be inherited and when this is/was released
• UK bank or building society statement evidencing transfer of funds

Builder cashback/deposit/incentives

Builder incentives/cashback accepted subject to the following criteria:

• Any amount greater than 5% will be deducted to determine the net purchase price. The Mortgage Works will lend against the lower of the net purchase price or value

Where deposit funds have been paid directly to the developer or builder, the following proofs are required:

• A letter from the solicitor acting for the applicant stating the amount paid and when, and
• The applicant’s latest bank statement showing the funds being transferred (A letter from the developer is not acceptable).

Pensions: Acceptable proofs

• If pension funds have been released, bank statement/passbook (dated within the last three months) will be accepted as proof
• If pension funds have not been released, latest pension statement (no more than 12 months old) showing sufficient funds to cover the deposit amount is required.

Repayment of loans

• Deposits provided from the repayment of loans are acceptable from a third party if repaid over three months ago and will be treated as savings
• The maximum number of gifts or loan repayments, either separately or in aggregate, will be two per application.

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9. Property restrictions

Property concentration exposure limits

The Mortgage Works will consider its overall exposure by applicant, geographical area and development when assessing applications. These exposure limits are per applicant and the number of units include securities mortgaged to other lenders and/ or unencumbered properties. The maximum concentration that can be considered per development is:

• One - three units: 1 unit if a purchase application*
• Four - 20 units: 25%, rounded down to the nearest unit
• 21+ units: Maximum of 10 in a postcode up to the first digit of the second grouping (e.g. BH2 6) Up to 5 in the exact postcode (e.g. BH2 6EP)

These exposure limits are per applicant and include securities mortgaged to other lenders.

* For remortgages we can consider up to 3 flats, in a block of no more than 3 flats, proving the applicant has owned each of their flats for at least 12 months.

Scheme abuse

The Mortgage Works customers aren’t allowed to live in the Buy to Let property at any time and will be in breach of the terms and conditions of the mortgage contract should they choose to do so. Where this is the case, The Mortgage Works’ policy is to give the customer a period of time in which to vacate the property, or instead remortgage to a residential loan. If a customer fails to comply with these terms, this may lead to legal action being taken against them, which could ultimately result in The Mortgage Works taking possession of the property.

Minimum property value/purchase price

£50,000 (unless otherwise stated).

New build Buy to Let applications

New build flats and houses are defined as:

• A house/flat built within the last 12 months
• A house/flat built over 12 months ago but still owned by the developer
• A house/flat built over 12 months ago but the first purchase/legal completion of the property was less than 12 months ago

Applications for new build flats accepted up to a maximum of 75% LTV.

The Mortgage Works instructs its valuers to value all new properties (flats, houses and maisonettes) on an ‘as new’ basis.

Minimum acceptable lease term on new build properties (including office conversions) is 125 years for flats and 250 years for houses (for further details please speak to an Intermediary about Property Restrictions for full criteria around New Build lease terms).

If new, or built within five years, the security must have a warranty guarantee. The Building warranties we'll accept include:

• NHBC
• LABC
• Build-zone
• Premier Guarantee
• One Guarantee
• CADIS
• ABC+
• Build Assure (New Home Structural Defects Insurance)
• Checkmate's Castle 10 (where out buildings such as a detached garage are also being constructed, an endorsement to include these in cover is required).
• Global Home Warranties (Structural Defects Insurance)
• The Q Policy for Residential Properties (provided by Q Assure Build)
• The Q Policy for Bespoke Properties (provided by Q Assure Build) - detached only
• International Construction Warranties (ICW) - an endorsement will be required to include it in the cover, if the property has a flat roof greater than 10 square metres.
• Ark Residential New Build Latent Defects Insurance - where a detached garage/outbuilding has been constructed at the same time as the main building, the policy must include an endorsement confirming cover for the detached garage/outbuilding.
• Advantage
• Homeproof (formerly Aedis)
• BLP - formerly known as Building Life Plan (excluding self builds under construction). These policies are underwritten by Allianz Global but written by BLP.
• Protek
• TMSC
• Professional Consultant's Certificate (PCC) issued by an Architect/Surveyor. The Certificate is checked by the solicitor and must comply with the requirements of the UK Finance Lenders Handbook. PCCs are acceptable for newly built homes within a development of no more than 10 units. A maximum of 4 units within the structure where they're within a continuous structure. For example, a row of terrace houses or block of flats. We'll require a PCC for newly converted or homes which have recently been significantly altered or refurbished. Retrospective certificates by a professional who has not supervised the project from the start and inspected the build at regular intervals are not acceptable.
• CRL - This company is no longer issuing policies. We accept the New Build 10 year structural defects insurance policy for residential property. We’ll only accept this if the final certificate is dated 04/09/2019 or earlier, and the underwriter is International General Insurance Company (UK) Ltd (IGI) or CGICE or the final certificate is dated 05/09/2019 or later, and the underwriter is International General Insurance Company (UK) Ltd (IGI) and the final certificate has been signed by Ark Insurance Group Ltd. Arks final certificates are titled: ‘10 year Structural Defect Insurance Policy’. All final certificates signed off by Ark are proof that the warranty is acceptable.

We won't accept the warranties if:

• On New Build properties underwritten by Alpha.
• Non New Build properties being sold by first or subsequent owner and properties under five years old, with the warranty underwritten by Alpha.

Purpose built flats and studio flats

The internal floor area must be no less than 30 square metres. Studio flats must contain a separate bathroom.

Property developers

• Property developers (for example, a person who owns 25% or more of a business whose principal activity is property development) are not accepted
• Applications for properties that have been built or converted by an applicant who isn’t a property developer can be accepted, providing the property is fully complete and will be let on completion.

Minimum lease on leasehold properties

Leasehold properties must have a minimum lease of 70 years at application. Minimum acceptable lease term on new build properties (including office conversions) is 125 years for flats and 250 years for houses (for further details please speak to an Intermediary about Property Restrictions for full criteria around New Build lease terms).

Local Authority Flats

We won’t accept former Local Authority flats in blocks of more than five storeys. This also applies to maisonettes and Scottish tenements in blocks of more than five storeys that were, or still are, in Local Authority ownership.

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10. Limited Companies

Key criteria 

Our Limited Company products are only available to Special Purpose Vehicles (SPVs), set up solely for the buying, letting and selling of their own residential property.

• Only SPVs with one or more of the following Standard Industrial Classification (SIC) codes are considered: 68100, 68201, 68209, 68320
• To find which SIC codes are associated with a company you can search on the Companies House website (http://beta.companieshouse.gov.uk/). Companies must be registered in England, Wales or Scotland. SPVs are considered from day one of being set up.
• A floating charge over assets of the company isn’t required.
• SPVs that have associated commercial property/assets are not accepted.
• Personal guarantees are required from all beneficial owners in all cases.

Company structure

• Companies must be a SPV, company structures outside of this aren’t acceptable. The maximum number of directors/shareholders is two and they must be the same people.
• Directors/Shareholders on a The Mortgage Work application must match records at Companies House.
• All shareholders must be directors and own 100% shareholding in the limited company between them.
• We’ll accept two directors where only one is a shareholder, providing they hold 100% shareholding.
• Directors may only have one limited company financed to The Mortgage Works.
• The Company must advise us of any proposed changes in the directors of the Company or shareholding. If your client fails to comply, this may lead to legal action against them.
• All directors/shareholders must meet The Mortgage Works' standard BTL criteria. Please visit themortgageworks.co.uk/lending-criteria for more information.
• Make sure to input the Company/Person with Significant Control (PSC) Director details correctly, as we’re legally obliged to tell Companies House if there’s a discrepancy between beneficial owner details and the information on the PSC register.

Change to company structure

In accordance with The Mortgage Works’ Standard Mortgage Conditions, the Company must advise The Mortgage Works of any proposed changes in the directors of the Company or shareholding.

If a customer fails to comply with these terms, this may lead to legal action being taken against them, which could ultimately result in The Mortgage Works taking possession of the property.

Maximum companies with The Mortgage Works

Directors / shareholders may only have one Limited Company financed to The Mortgage Works.

Loan purpose

Purchase, Remortgage and Further Advance.

Portfolio landlords

• Portfolio landlord criteria applies if the company and its directors own four or more mortgaged properties, either separately or altogether (please refer to section 5 for The Mortgage Works’ Portfolio criteria).
• Where properties are owned in personal names, it must pass 145% rental cover. For properties held in a company, it must pass 125% rental cover.

First time landlords (FTL)

Accepted.

Houses in Multiple Occupation

Accepted.

Let to Buy

Not accepted.

Regulated buy to lets

Not accepted. Where the tenant is a relative of the director / shareholder, The Mortgage Works will consider this a regulated buy to let application.

Separate representation

Not required.

Rental assessment

• Interest cover ratio (ICR): 125% for BTL and 175% for HMO.
• Stress Rates: The stress rate policy for Limited Company applications is the same as BTL. Please refer to section 3 - Stress rates for full details.

Minimum income

None.

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