Residential | D-K

Where a property is being purchased, applicants are expected to provide a deposit of at least 5%* of the purchase price

*The personal stake may vary depending on specialist schemes or circumstances where loan to value restrictions apply.

The applicants must declare the source and amount of their deposit on the application form. Usually, the deposit will be from the applicants’ own savings, the sale of their previous property, a gift from relatives or a combination of these sources.

It is not acceptable for applicants to resort to secondary borrowing to fund the deposit, for example, by raising a personal loan. The only exceptions to this rule are

• Where the applicant is raising a deposit from the equity in another property
  

For all purchase applications the applicant must provide documented proof of the source of the deposit.

Staff working in the UK for embassies, high commissions and international organisations (eg, United Nations) benefit from diplomatic immunity. Mortgage requests from applicants who have diplomatic immunity are outside of lending standards and should be declined.

Local Authorities, Housing Associations and private developers / house builders (as part of their affordable housing obligations) may offer properties for sale at a discount, where the discount is set as a percentage of open market value, for example 80%. This discount may apply in perpetuity; that is, for subsequent sales the owner can only sell the property at the same discount based on the open market value at that time.

The discount arrangement is usually under a ‘section 106’ restriction. Discounted market sales are acceptable provided this restriction does not apply to the lender who may sell the property at open market value.

Maximum 85% LTV based on the discounted sale price. Where there is a section 106 agreement, the LTV must not exceed 80% of the open market value (not the discounted sale price).

Where an applicant works for a “relative or partner”* who owns more than 20% of the company in which the applicant is employed by, we will treat them as employed, however we must take additional steps to confirm sustainability of income. The last 3 months payslips, corresponding bank statements and latest P60 must be provided. Where there is subsequently any concern with regards to sustainability of income required, underwriters should request trading accounts for the company for the last 2 years, or where employed by an LLP, a letter from the Finance Director/Senior Partner confirming income.

*”Relative or Partner” is defined as “The borrower’s spouse or civil partner; a person (whether or not of the opposite sex) whose relationship with the borrower has the characteristics of the relationship between husband and wife; or the borrower’s parent, brother, sister, child (including step child), grandparent or grandchild.

Employed applicants are required to have been employed by their current employer for 3 consecutive months prior to application or to have been in continuous employment with no gaps for the last 18 months.

The Family Springboard Mortgage is a product designed to allow family members and others to help a loved one get on, or up, the property ladder. Through it ‘helpers’ provide a 10% security deposit held in a ‘Helpful Start’ account and applicants are then able to purchase a property with no deposit or a personal deposit starting at just 5%. After 5 years the 10% contribution is released back to the helpers, with interest added (restrictions may apply), and the applicant continues with their mortgage.

• Applications to be submitted with a deposit from 0% to 9.99% (including any application fees)
• LTI at 4.0 times, however, if applications earn over £50,000 individually or collectively this will go up to 4.49 times
• Maximum loan amount of £500,000
• Maximum term of 35 years
• Applies to purchases only, but not restricted to first-time buyers
• Repayment type must be standard capital and interest, ie not interest-only
• Applicants can only be party to 1 Family Springboard Mortgage; however, there is no restriction to the number of Family Springboard mortgages that helpers can support
• Helpers must put 10% of the purchase price into a Helpful Start account. The deposit monies are to be held for a period of 5 years from mortgage completion subject to satisfactory mortgage payment history throughout that period
• A legal charge must be obtained over the Helpful Start account deposit monies before any mortgage monies are released and the deposit account must be frozen for the period required to support the mortgage. While the charge is in place the Helpful Start account is not covered by the Financial Services Compensation scheme
• The Helpful Start account holders must obtain Independent Legal Advice, to be evidenced by Mortgage Services prior to the release of any mortgage monies. The borrower and the Helper may have the same solicitor for the Independent Legal Advice (though this is dependent on the discretion of the solicitor’s firm)
• Family Springboard Mortgages are not available on new build properties. Such applications should be submitted under the NewBuy Scheme
• It is unacceptable for Family Springboard applications to be submitted where the property is to be let from the outset; this includes armed forces
• Family Springboard mortgages are not available under the Family Affordability Plan (Joint Borrower/Sole Proprietor policy)
• Family Springboard is not available for shared equity or shared ownership propositions
• No additional borrowing is allowed during the first 5 years or while the security deposit funds are being relied on to support
• Standard policy rules apply with regards to affordability, income multiples and adverse credit
• All applicants must be UK/EU/EEA national OR have permanent rights to reside in the UK – this is to be evidenced, usually by the production of passport documentation

An applicant cannot apply for a Family Springboard mortgage if they own a BTL property or have a second residential property, even if it is on a Permission to Let basis.

Mortgage applicants must be first-time buyers who haven’t previously held a mortgage in the UK or abroad. This applies to all applicants for a joint application. 

Setting aside a big deposit for a new home can be a challenge. But with the government-backed Help to Buy scheme, customers with smaller deposits can qualify for loans on new-build homes of up to £600,000 in England.

How the scheme works

The government provides an equity loan through the Homes and Communities Agency of up to the limit for your region (15% in Scotland, 40% in London, 20% everywhere else) and we provide the rest. The equity loan will require an affordability assessment to be carried out by a local HomeBuy Agent.

Find out if your clients are eligible

• They’ll need a minimum 5% deposit. A part-exchange from an existing property isn’t allowed
• They’ll need to be a first-time buyer or existing homeowner moving to a new residence
• The property purchased must be their sole residence, and cannot be let out (even if they’re a member of the Armed Forces)
• The applicant, or any occupier, can't own a second property, even if it’s a Buy to Let or Permission to Let property 
• Maximum 40 year term for the mortgage
• Income multiples are capped at 4.49 times income
• Their home must be built by a Help to Buy registered builder
• They must choose a mortgage from our Help to Buy product range, which is available on a repayment basis only 
• They can’t port an existing mortgage onto the property. The Help to Buy mortgage must be taken for the entire mortgage amount 
• Help to Buy: equity loan mortgage products are not portable
• Residency/Citizenship requirements – normal lending policy should be applied – see Residency
• Local Authority Shared Equity schemes, on similar terms to the Help to Buy Equity scheme, are acceptable but only where Barclays security is not compromised through any scheme restrictions. These will be based on the same lending criteria as the Help to Buy Equity Scheme

About the government equity loan

• The loan must be repaid in 40 years, or sooner if they sell the property
• The loan is interest-free for the first 5 years, followed by a fee of 1.75% in the sixth year, and rising annually by RPI plus 1%
• In addition to being included in the Special Scheme information in Borrowing Requirements, all Shared Equity loan balances, including England & Wales Help to Buy Equity loans, must be recorded within Financial Commitments under 'Shared Equity' if interest is due within the mortgage term. The system will then take 3% per annum of the outstanding balance of the loan as a commitment for affordability
  • Please note: only in circumstances where no interest is due on the shared equity loan at any stage within the mortgage term (such as the Scotland HTB equity scheme) or the equity loan is being paid off in full as part of the application, should the equity Loan not be recorded as a Financial Commitment
  • If repaying part of an interest charging equity loan, these should be input as two Shared Equity commitments – one for the Shared Equity loan balance to be repaid (marked ‘to be repaid’) and one for the Shared Equity loan balance to remain (marked ‘not to be repaid’)
• The following non-financial incentives are acceptable, but must be declared to the valuer on the CML ‘Disclosure of Incentives’ form so that they can properly be taken into account:
  • White goods (where not included as standard specification)
  • Floor coverings
  • Integrated lighting (downlighters)
  • Kitchen upgrade, including tiling and worktop
  • Bathroom upgrade
  • All electric upgrade – ie additional sockets, TV points, etc
  • PV (photovoltaic) panels
  • Turfing/landscaping
• Any builder deposit/cash incentive, ie stamp duty, legal costs and estate agent fees, under this scheme must not exceed 5% of the purchase price. It is not acceptable for any builder cash incentive to be used as part of the 5% deposit which must be funded from the applicant’s own resources.
• There must be no restriction on sale of the property – this includes the existence of any S106 agreement

To find out more, just call the IBC at 0345 073 3330.

Re-mortgage from another lender

Customers who wish to re-mortgage their Help to Buy Equity Loan (England, Wales and Scotland) with Barclays can do so by selecting a suitable product from our standard product range. Note that any Barclays products that are branded as ‘Help to Buy Equity Loan’ are only available for Purchase.

Help to Buy equity loan re-mortgages can be accepted using the following criteria

• For like-for-like remortgages, we accept applications for up to 75% of the current market value of the property (80% for Scotland)
• If additional borrowing is requested to repay part of an equity loan or for other purposes, we accept applications for up to 85% of the current market value of the property (which includes the additional borrowing)
• Where additional borrowing is requested to repay all of an equity loan, we accept applications for up to 90% of the current market value of the property (including the additional borrowing)
• Additional borrowing can only be considered with HomeBuy Agency permission, who may require an equity loan to be repaid

Help to Buy (Scotland)

Help to Buy (Scotland) policy requirements are the same as that for the scheme applicable in England (above) except for:

• The Scottish government provides an equity loan of up to 15% of the property's value
• The maximum new-build property value is £200,000
• Available on properties in Scotland only
• There is no interest charge on the equity loan portion during the lifetime of the loan – it is interest-free – and as such it shouldn’t be included in any affordability assessment

Help to Buy (Wales)

Help to Buy (Wales) policy requirements are the same as those for the scheme in England (above) except for:

• The maximum new-build property value is £300,000
• Available on properties in Wales only

Service personnel may be offered a Forces Help To Buy Loan (FHTB), which replaces the Long Service Advance of Pay (LSAP). This is usually a 10-year interest-free loan of up to £25,000. This may be used as a deposit to purchase a property but should be treated as a loan commitment in the normal way with the monthly payments being deducted from the applicant’s income.

The sourcing of the deposit in this way must be declared in the mortgage submission, and advisors or underwriters may ask the applicant to provide the ‘Personal Information Note’, which will contain details of their loan.

Note: Forces Help to Buy may be used as a deposit to help fund the purchase of a property under the Help to Buy: equity loan, but it cannot be used to help fund a deposit for buying a property through the Help to Buy: mortgage guarantee scheme.

The maximum loan to value allowed on an interest-only basis is 50% where the repayment strategy is the sale of the mortgaged property, or 75% where the repayment strategy is another allowable source.

Where the repayment strategy is the sale of the mortgaged property, customers are required to have £300K of equity in the property. 

The maximum term for an interest only mortgage is 25 years and cannot extend into retirement.

The maximum income multiple applicable to Interest only mortgages is 4.49x (please see the Income Multiples section of our Lending criteria for full policy details).

There is a minimum income criteria required to be eligible for interest-only borrowing (including part and part borrowing):

• Sole application – the applicant must have a gross income of at least £75,000
• Joint application – one applicant must have a gross income of at least £75,000
• Joint application – where no individual income is over £75,000, joint gross income must be at least £100,000

Income must meet lending standards requirements with regards allowable gross income types i.e. all allowable income types not including any annualised performance bonus paid at the discretion of any employer.

Given the importance of the minimum income criteria, and to protect your customers, please ensure that the minimum requirements are met – particularly where a customer is at the margins of income threshold.

Debt consolidation is not allowed for existing or new interest-only borrowing. The only exceptions to this being where an existing customer has a drawn mortgage reserve balance and wants to consolidate this, or where a customer wishes to add an ERC to the balance of the mortgage when remortgaging to us from a competitor.

The Barclays Group requires all customers who take an interest-only mortgage to have in place a repayment plan for their loan on completion of the advance. Unless using sale of property to be mortgaged, we require the repayment vehicle to have been in place for 12 months. The Barclays Group will consider one, or a combination of the following as acceptable repayment plans for interest only mortgages:

• An existing endowment policy
• An existing stocks & shares ISA
• An existing (minimum 12 months) share, unit, or investment trust (professionally managed)
• Sale of mortgaged property

Where your client wishes to use any other method of repayment to repay the interest-only amount other than the acceptable repayment plans detailed above, this is not acceptable. While it will be the customer’s responsibility to maintain the repayment strategy throughout the term of the mortgage, as a responsible lender, it is important for us to ensure all interest-only mortgages are supported by an acceptable repayment strategy which will be sufficient to cover the interest-only mortgage on maturity.

Part and Part Borrowing – customers can borrow up to 80% LTV by choosing a Part and Part repayment option. The interest only element of the loan must be up to a maximum of 75% LTV (or 50% where the repayment strategy is the sale of the mortgaged property).

In addition, where the repayment strategy is the sale of the mortgaged property, at the outset there must be a minimum of £300k equity (this includes any capital & interest borrowing) after accounting for any interest only lending amount.

E.g. £600K property (based on lower of valuation and purchase price); maximum interest only element is £300K (50%) with a maximum £180K on capital & interest repayment, so total LTV 80% with £300K equity once the capital & interest element is repaid).

Transactions at Undervalue – eligibility must be based on the actual purchase price and not the property valuation

Existing interest only customers

Existing interest only customers wishing to borrow additional funds or port must meet the current lending standards relating to interest only. This includes meeting the minimum income threshold. Existing customers who do not meet current lending standards for interest only would need to switch their repayment type to capital and interest

We require a plausibility check to be done on all interest-only mortgages as per the assessment guidelines in the table below. This will determine if your client can borrow the required amount on an interest-only basis. Documentary evidence must be submitted with the mortgage application and will be checked as part of the underwriting process.

We accept internet bank statements as supporting documents as long as they’re stamped and certified by your client’s bank.

What if they’re not stamped?

The statements need to show your client’s account number and sort code, or these need be on your client’s proof of income document – for example, your client’s pension payslip or benefits statement.

They also need to show the full name of the applicant(s) – for example, ‘Mr Andy A Smith’ (you can write your client’s middle name as an initial).

What if my name isn’t on the statement?

You’ll need to give us certified documents showing your client’s connection to the account.

This can be

• A letter from your client’s bank showing your client’s full name, address and account number
• A copy of a cheque showing your client’s full name and account number
• A proof of income document – for example, your client’s pension payslip or benefits statement – showing the income that goes into your client’s account and your client’s name
• A P60 or Annual Tax Summary – we need to be able to match your client’s full name to your client’s proof of income document (using their National Insurance number), then match this to the bank statements you gave us

You can’t edit your client’s statements in any way, and we need to be able to see any credit or debit balances you have.

So you know – you only need to give us a bank statement if your client’s LTV is higher than 75%.

Japanese Knotweed is an invasive plant introduced into the UK and has no natural predators. The plant is known to exploit existing weaknesses in buildings. Applications where Japanese Knotweed is identified should be looked at in accordance with the following requirements:

CATEGORY 4
Japanese Knotweed is within 7 metres of the main building, habitable spaces, conservatory and/or garage and any permanent outbuilding, either within the curtilage of the property or on neighbouring land;
and/or
Japanese Knotweed is causing serious damage to permanent outbuildings, associated structures, drains, paths, boundary walls and fences.

To be reported in the valuation report together with a valuation of the property. Further investigation is required. This is to be undertaken by a Property Care Association (PCA) registered or similarly qualified firm. All recommended remedial works must be covered by an insurance backed guarantee. The guarantee must be for a minimum of 10 years, be property specific and transferable to subsequent owners and any Mortgagee in Possession.

An insurance backed treatment plan must be confirmed prior to completion. It is not necessary for the recommended remedial works to be completed prior to the release of any mortgage monies.

CATEGORY 3
Japanese Knotweed is present within the curtilage, but is more than 7 metres from the main building, habitable spaces, conservatory and/or garage and any permanent outbuilding. 

Report this in the valuation together with a valuation of the property. No further investigation or action is required.

There is damage to outbuildings, associated structures, paths and boundary walls and fences and this is considered minor.

Report this in the valuation together with a valuation of the property. Further investigation is required. This is to be undertaken by a Property Care Association (PCA) registered firm. All recommended remedial works must be covered by an insurance-backed guarantee. The guarantee must be for a minimum of 10 years, be property specific and transferable to subsequent owners and any mortgage in possession.

An insurance-backed treatment plan must be confirmed prior to completion. It is not necessary for the recommended remedial works to be completed prior to the release of any mortgage monies.

CATEGORY 2
Japanese Knotweed is not seen within the boundaries of the property, but it is seen on a neighbouring property or land. It is within 7 metres of the curtilage of the subject property, but more than 7 metres away from the main building, habitable spaces, conservatory and/or garage and any permanent outbuilding.
To be reported in the valuation report together with a valuation of the property. No further investigation or action required.

CATEGORY 1
Japanese Knotweed is not seen at the property, but it can be seen on neighbouring property or land where it is more than 7 metres away from the curtilage of the subject property.
To be reported in the valuation report together with a valuation of the property. No further investigation or action required

Conditions

• Available in England, Wales, Scotland and Northern Ireland
• All proprietors must also be borrowers
• All non-proprietor borrowers who live (or will live) in the mortgaged property must sign an occupancy form
• All non-proprietors must take independent legal advice that is evidenced by a solicitor's letter
• Where the proprietor has an existing residential property that isn't being sold, the maximum LTV is 80% (residential only)
• All other standard LTV limits apply
• All borrowers must sign the property's mortgage deeds

Exclusions

• Not available on our Family Springboard, Right to Buy, First Home Fund or Help to Buy schemes

Criteria

This facility is available for Barclays Residential Mortgages and Openplan Offset products, available via all channels. In cases where this arrangement is required, the following must be adhered to:

• The applicants must clearly state the requirement for this arrangement and the name of the sole property owner on the application form in the ’Additional information‘ section
• The borrower who is not named on the Title should sign an occupancy form if living in the property
• All borrowers must sign the Mortgage Deed
• It is mandatory that any borrower/s not named on the Title to the property obtain independent legal advice. This is to be confirmed to Mortgage Services by the solicitor providing the advice by returning our standard ILA documentation before any completion monies are released
• Joint Borrower/Sole Proprietor is not available with Help to Buy

This arrangement can only be made where one of the joint borrowers is not also going to be a legal estate holder, ie will not be on the title deeds. Under no circumstances can a mortgage be agreed where any party named on the title deeds is not also going to be a mortgage borrower.

All other elements of Standard Lending Policy are to apply.

Notes:

• If the non-proprietor has any existing residential mortgage commitments (ie not BTL/PLT) these must be taken into account in the affordability assessment. Calculations should be made on a standard repayment basis over the remaining mortgage term at the current pay rate or stressed rate, whichever is higher
• Products under the NewBuy scheme allowing the maximum LTV to be increased to 95% on new build purchases in England for specific participating builders are available under this borrowing structure for the purchase of principal residence of named occupier/s

For intermediary use only