In this section we cover:
Property concentration exposure limits
The Mortgage Works will consider its overall exposure by applicant, geographical area and development when assessing applications. The maximum number of securities that can be considered per development is:
- 1-3 units: 1 unit*
- 4-50 units: 25%, rounded down to the nearest unit
- 51-80 units: 12 units
- More than 80 units: 15%, rounded down to the nearest unit
These exposure limits are per applicant and include securities mortgaged to other lenders.
*Exceptions apply where the applicant owns more than one flat in a small block (no more than 3 flats) providing they have been owned for more than 12 months.
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's 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 (apart from HMO which will need a minimum property value of £100,000).
New build buy to let applications
New build flats and houses are defined as:
- A house/flat built within the last twelve months
- A house/flat built over twelve months ago but still owned by the developer
- A house/flat built over twelve months ago but the first purchase/legal completion of the property was less than twelve months ago
- Applications for new build flats accepted up to a maximum of 65% LTV
- The Mortgage Works instructs its valuers to value all new properties (flats, houses and maisonettes) on an 'as new' basis
- If new, or built within 10 years, the security must have a warranty guarantee under NHBC, Premier, LABC, HAPM, Global Home, Castle 10, Build Zone, Build Assure, BLP, Zurich Municipal, CRL, Q Policy or have a qualified Architect’s, Surveyor’s or Structural Engineer’s Supervision Certificate (Professional Consultants Certificate).
New build property lease terms (includes office conversions)
- Minimum acceptable lease term on new build properties is 125 years for flats and 250 years for houses.
- Maximum starting ground rent on all new build properties with a leasehold tenure is limited to 0.1% of the property value.
- Ground rent must be reasonable at all times during the lease term. For example, ground rent escalation should be linked to RPI (Retail Price Index) or a similar index, and unreasonable multipliers of ground rent will not be permitted, for example doubling every 5, 10 or 15 years.
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.
Properties next door
Applications where the proposed security is attached to a property owned by the applicant i.e. terraced or semi-detached are subject to the following criteria:
- New purchase applications are not accepted
- Remortgage applications for either / both properties are acceptable subject to the applicant having owned and rented both properties for a minimum of 12 months
- Maximum of 2 attached properties that are owned by the applicant (3 or more attached properties in a row are unacceptable)
- The Property cannot be adjoining to the applicant's main residence (where owned).
- Property developers (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 the applicant are accepted, subject to the property being let for a minimum of twelve months at the time of application.
Minimum lease on leasehold properties
Leasehold properties must have a minimum lease of 70 years at application.
See also New Build property lease terms above.
Local Authority flats
A flat in a Local Authority or Ex Local Authority block of more than 5 storeys will be considered where the security is in Greater London.