Lending Criteria | Chorley Building Society

Where we lend

We lend in England including the Isle of Wight, Wales including the Isle of Anglesey, the Scottish mainland and the Isles of Argyll and Bute.

Number of Applicants

The Society may consider up to four applicants per application.

EU Nationals

Applicants who are EU Nationals (EU, EEA and Swiss Citizens) who were living in the UK as at 31st December 2020 and have been granted Settled or Pre-Settled status by 30th June 2021 (provided no diplomatic immunity is in place) may be considered.

Non EEA Nationals

Applicants with permanent right to reside in the UK who have lived in the UK for the last 3 years may be considered, provided no diplomatic immunity is in place.

Term

The minimum mortgage term is 1 year.
The maximum mortgage term is 40 years.

Age

Minimum Age

Criteria	Description
Standard Residential Lending	18
Self and Custom Build Lending	21
Buy to Let Lending (including CBTL)	21
Holiday Let Lending	21
95% LTV (subject to product availability)*	21

*The Society does not currently have any 95% LTV products

Maximum Age at end of term

Criteria

Description

Maximum Age – Applicant(s)

Interest Only or Part & Part Mortgages – up to a maximum age of 85

Repayment Mortgages – up to a maximum age of 90

Maximum Assumed Retirement Age

70 unless the customer states lower, or can demonstrate suitable evidence of a later retirement age.

Retirement

Criteria	Description
Lending into Retirement	Maximum 75% LTV
Lending whilst Retired	Maximum 70% LTV

LTV Loan Amount

LTV	Loan Brackets
>60 – 70% LTV	£950,001 to £1,200,000 Loans above £1m subject to Board approval
>70 – 80% LTV	£600,001 to £950,000
>80 – 85% LTV	£450,001 to £600,000
>85 – 90% LTV	£400,001 to £450,000
>90 – 95% LTV (subject to product availability)	Up to £400,000

Joint Borrower Sole Proprietor (JBSP)

JBSP allows two or more borrowers to combine their borrowing capacity to maximise mortgage borrowing but with only the main applicant(s) listed on the mortgage deed.

This enables a close relative such as a parent or family member to help a son, daughter or relative onto the property ladder: the main applicant(s) benefit from using close relative’s additional income to secure a larger mortgage, while retaining sole ownership of the property.

The Society will consider JBSP applications for House Purchase and Remortgage on Standard Residential and Buy to let Mortgages

All applicants are subject to standard lending criteria
Loan to Value is determined by loan amount and mortgage product
All applicants must have a close relationship
We do not permit applications on a JBSP basis where a Joint Borrower will reside in the property but is not going on the mortgage deed.
Repayment by Capital & Interest and by exception Interest Only subject to this meeting standard lending criteria
The following cannot be used as a repayment vehicle for Interest Only or Part Interest Only:
- An asset of the Joint Borrower if it is in joint names with someone not named on the mortgage
- Sale of the main residence of the Joint Borrower
- Pension fund of Joint Borrower
The Joint Borrower(s) must take independent legal advice and evidenced by the independent legal adviser using the Society’s Independent Legal Advice Certificate

Credit History Profile

The Society cannot accept any application where the applicants are classed as credit impaired.

Impaired Credit Definition:

A customer who:

within the last two years has had arrears equivalent to three months’ payments, on a mortgage or other loan , except where the arrears reached that level because of late payment caused by errors by a bank or other third party; or
has been the subject of one or more county court judgments, with a total value greater than £500, within the last three years; or
has been subject to an individual voluntary arrangement or bankruptcy order which was in force at any time within the last three years.

In the case of loans involving two or more borrowers, the impaired credit test is whether any one of the borrowers individually meets any of the impaired credit conditions.

The Society will consider applicants who are not credit impaired as follows:

We can accept cases on a Standard Lending basis where the applicant can meet the following:

CCJs

All CCJs have been registered and settled more than 3 years ago (irrespective of value) or;
No more than 1 CCJ within the last 3 years up to a value of £500 that is not connected with a mortgage, loan or revolving credit e.g. parking fine

Defaults

Subject to Defaults settled more than 2 years ago or;
No more than 2 Defaults within the last 2 years for less than £500 in total that are not connected with a mortgage, loan or revolving credit e.g. Utility bills or Mobile Phone airtime

Debt Management Plan

Have a DMP that has been settled more than 2 years ago

We can accept cases on our range of Credit Renew Mortgages where a life event they have recovered from has impacted their credit profile meaning they do not meet our standard lending criteria. The maximum LTV for the Credit Renew Products is 80% and applicants must meet the following:

CCJs

Total of all CCJs must not exceed £500
Subject to more than 1 CCJ issued within the last 3 years not connected with a mortgage, loan revolving credit.
Subject to 1 or more CCJ issued within the last 3 years connected with a mortgage, loan or revolving credit
If any CCJ is connected with unsecured/secured lending the cumulative amount of arrears overdue must not have reached the equivalent of 3 or more monthly payments within the last 2 years.

CCJ is unsettled, or only settled within last 2 years. If unsettled must settle before completion.

Defaults

All defaults must have been registered more than 6 months ago
Subject to more than 2 defaults within the last 2 years, not connected with a mortgage, loan or revolving credit regardless of total amount
Subject to defaults within the last 2 years connected with a mortgage, loan or revolving credit
If any Default is connected with secured/unsecured lending the cumulative amount of arrears must not have reached the equivalent of 3 or more monthly payments within the last 2 years
Default does not need to be settled. If unsettled must settle before completion.

Debt Management Plan

Subject to a DMP within the last 2 years (regardless of settlement) that started at least 12 months ago and which must not include any secured or unsecured loans.

Debt Consolidation

Debt Consolidation may be considered up to a maximum of 80% LTV.

Capital Raising

Capital Raising may be considered up to a maximum of 80% LTV. The Society will not allow capital raising for the following reasons:

Payment of gambling related debts.
Debt Consolidation or Capital Raising above 80% LTV.
Buy to Let additional borrowing above 80% LTV.
Purchase of Stocks and Shares or currency speculation.
Capital injection in to a business or consolidation of a business loan unless the business accounts have been assessed to ensure this is not a “distress” application.

Income Multiples

No of incomes used	Loan to Income Ratio
For 1 or 2 Incomes	Up to 4.49 x Total Income
For 3 or 4 Incomes	Up to 3.25 x Total Income

Income Types – Employed

Employed	We will require the last 3 months payslips to evidence current income.
Salary	100% x annual gross salary
Allowances – for example: Car Housing Additional Duties Shift Location	100% if consistent; 50% (if regular) but amounts vary
Bonus	100% if consistent over last 2 years (average of last 2 years) 50% if regular but amounts vary (average of last 2 years)
Overtime	100% if consistent (average of last 3 months) 50% (average of last 3 months)
Commission only/ majority commission applicants	100% x average commission earned over the last 2 years if consistent 50% (average of commission earned over last two years)
Renewable fixed term contracts	Accepted only where the applicant can display a continuous history of employment for at least 2 years (can be with different employers)
Non-renewable fixed term contracts/ temporary contracts/agency contracts	Accepted only where the applicant can display a continuous history of employment for at least 2 years (can be with different employers)
Probationary Periods	Can be considered subject to a detailed rationale outlining risks and mitigations.
Maintenance	Accepted subject to a minimum of 6 month payment track record and dependent on: The age of the dependant(s) and the period the payments will continue How dependent the applicant(s) are on the maintenance to supplement other earned income
Bursary or Stipend	Can be considered if there is either: Another main income (i.e. the bursary or stipend is a second income) or; Another applicant with an acceptable main income or; There is a joint borrower (JBSP) or Guarantor We can accept 100% of the bursary or stipend but would exclude payments for assistance with costs such as fees will be excluded.
Apprenticeship	Can be considered subject to either: There being another main income (i.e. it is a second income) or; There is another applicant(s) with an acceptable main income or; There is a joint borrower (JBSP) or Guarantor We can accept 100% of the income subject to a continuous history of employment for at least 2 years.
Savings and Investments	Can be considered subject to suitable documentary evidence of the savings or investments to be used.

Where any elements of a borrower’s income are reducing, including overtime, commission and bonuses the lower amounts will be used in the affordability assessment.

Income Types – Self Employed

We require a minimum of two years trading supported by SA302’s and corresponding tax overviews, plus finalised accounts.

Projections of self-employed income can be accepted.

Status	Income Assessed	Required Documentation
Sole Traders & Partnerships	Share of net profit taken over the last 2 years.	Latest 2 years’ accounts and HMRC SA302s (or equivalent) and corresponding tax overviews
Limited Companies	Average salary plus dividends taken over the last 2 years.	Latest 2 years’ accounts and HMRC SA302s (or equivalent) and corresponding tax overviews
Limited Liability Partnership (LLP) with 20% of more share	Average salary plus dividends taken over the last 2 years.	Latest 2 years’ accounts and HMRC SA302s (or equivalent) and corresponding tax overviews

*Accountants projections are not currently acceptable

Maternity, Paternity and Adoption Leave

If an applicant declares they are taking or will be taking maternity, paternity or adoption leave, the application can be considered subject to appropriate underwriter rationale.

Income is taken from before the leave – this can be from last 3 payslips and P60 (if available);
Applicant confirms in writing they will return to their job post the period of leave;
Reference is gained from employer to confirm they are still employed but on leave;
Underwriter has evidence / rationale to confirm the applicants can afford the monthly mortgage payment over the period of leave (this may be funded from savings, or family gift etc.) evidence of this would be required from bank statements and/or savings statements.

Gifted Deposits

Gifted deposits may be acceptable where the individual(s) making the gift have a close relationship with the applicant/s and where:

the gift is non-returnable
the individual(s) making the gift will have no interest in the mortgaged property

Guarantors

Guarantors are acceptable subject to the criteria below but are NOT accepted under the Help to Buy schemes.

The Society may be asked to consider a guarantor in cases where the applicant’s(s’) income is insufficient to pass the affordability test.

Maximum 1 Guarantor
No upper age limit, reviewed on a case by case basis
They will have no interest or share in the property.
Where the Guarantor is also making a capital contribution to the purchase price or to the monthly mortgage payment it must be confirmed in writing by the guarantor that this is a gift and that the guarantor will have no interest or share in the property.
The guarantor should:
Be a close relative of the applicant(s) (otherwise Credit Risk Committee approval will be required).
Have a clean credit record – with no history of bankruptcy, IVA’s, CCJ’s, defaults or missing payments.
Have income from employment, self-employment, pension, or investments
Have sufficient disposable income to comfortably maintain mortgage payments to the Society (if called upon) whilst maintaining all current obligations.
Be willing to accept responsibility for the whole mortgage debt (and accrued costs) if the borrower defaults.
Satisfy the same lending criteria that the Society would apply to a mortgage applicant.

Interest Only and Part Interest Only

Interest only is limited to:	Maximum 80% LTV (50% if downsizing is the Repayment Strategy); Minimum borrower equity of £175,000 if downsizing is the Repayment Strategy Maximum loan of £500,000
A combination of Part Interest Only & Part Capital and Interest is limited to:	Maximum 85% LTV; where the interest only repayment strategy is NOT downsizing) Minimum borrower equity of £175,000 if downsizing is the Repayment Strategy Maximum loan of £500,000 on the interest-only element Suitable documentary evidence of a credible repayment strategy must be provided at application stage. Where downsizing is the main Repayment Strategy the overall LTV is capped at 60%. (with a maximum of 50% LTV on the Interest-only element)
Repayment Strategies	The Society accepts a range of repayment strategies for residential ‘interest only’ and ‘part & part’ mortgages. Examples of acceptable repayment strategies are as follows: Endowment Policy. Savings / Investment Plan (Including Premium Bonds). The mortgage will require a minimum term of 10 years Premium Bonds – can only be used to a maximum of £50,000 per named customer. Pension Plan: Defined Contribution Schemes – 25% of the total fund value can be used. Defined Benefit Schemes – full projected tax free cash sum can be used. Sale of second property -located in the UK only. Sale of a commercial property (inc. Buy to Let). Downsizing (Sale of current property). The minimum level of equity at the time of application, must be a minimum £175,000 and the maximum loan to value is 50%. Each case will be assessed for suitability, according to the customer’s individual circumstances. Other repayment strategies may be acceptable subject to Credit Risk Committee approval
The Society will not accept the following as Repayment Strategies:	Anticipated inheritance. Repayment strategies held in a foreign currency e.g. funds held in a bank account/ investment/ pension plan in currency other than sterling or an asset held or valued in a foreign currency e.g. property or business abroad. Moving to rented accommodation at the end of the mortgage term. Moving in with family/friends at the end of the mortgage term. To convert to Capital & Interest at a later date. Bonus income.

Help to Buy Equity Loan Scheme

The Society will consider applications for House Purchase under the Help to Buy: Equity Loan Scheme Wales 1st April 2023 to 31st March 2025 subject to the following:

Applicants must be First Time Buyers
Maximum Purchase Price £300,000
Society to fund a maximum of 75% of the purchase price
Equity Loan of 20% minimum of the purchase price to be provided by the Help to Buy Agent or equivalent body in Wales
Minimum deposit of 5% required
Subject to the Society’s standard affordability criteria including equity loan payment
Maximum term 35 years (Equity Loan must be repaid by 25 years)
Repayment method must be Capital & Interest
Guarantors not acceptable

The Society will consider applications for Remortgage under the “Help-to-Buy Equity Loan” scheme subject to the following criteria:

Remortgage with no increase to the First Charge Mortgage balance

subject to a maximum Loan to Value limit in England and Wales of 75% of the property value; or
For properties within the London Area only, (where the Equity Mortgage can exceed 20% of the property value), the limits set out in the below table:

Homes England Equity Mortgage (“Lender Contribution”) as a percentage of property value. *	Maximum First Charge Mortgage to Value of proposed re-mortgage
30%	65%
40%	55%

80% of the property value in Scotland
Maximum term for a Remortgage where the Equity Loan exists is the unexpired term of the Equity Loan or less.
Repayment method must be Capital & Interest

Remortgage with capital raising to partially staircase

Subject to minimum staircase amount of 10% of the Market Value (with a minimum balance remaining on the Equity Loan of 5% of the Market Value). The capital raising amount must be used to repay the equity loan.

Remortgage with additional borrowing

Only permitted to:

Fund a partial staircasing payment
Fund Homes England approved improvements to the property
Fund a Transfer of Equity

In the case of Staircasing, the maximum First Charge Mortgage LTV shall be determined by reference to the Homes England Lender Contribution following the proposed remortgage and staircasing.

Maximum term for a Remortgage where the Equity Loan exists is the unexpired term of the Equity Loan or less.
Repayment method must be Capital & Interest.

Council House “Right to Buy/Right to Aquire” Purchases

Generally, the Society will grant an advance of up to 100% of the discounted purchase price providing the advance does not exceed 75% of the market valuation.

If, at the time of purchase, an applicant wishes to borrow additional funds to carry out home improvements taking the advance beyond 100% of the discounted purchase price, this may be acceptable subject to an appropriate retention being made, the Valuer confirming the value of the property after the works have been undertaken and the relevant local authority approval being given.

The product/illustration should be based on the true open market value not the purchase price.

Concessional Purchase

The Society will consider concessional purchase/gifted equity transactions between close family members subject to the following criteria:

The property is to be used as the main residence by the applicant(s).
The individual providing the concession will have no interest in, and will not reside at the property following completion.
Maximum 100% of purchase price and subject to a maximum 90% LTV of open market valuation. The product / illustration should be based on the true value LTV not the purchase price.

The Society will consider concessional purchase/gifted equity transactions between landlord and tenant subject to the following criteria:

The property is to be used as the main residence by the applicant(s).
The individual providing the concession will have no interest in, and will not reside at the property.
Maximum 100% of purchase price and subject to a maximum 90% LTV of open market valuation.
Applicant must have resided at the address for a minimum of 12 months prior to application.
The product / illustration should be based on the true value LTV not the purchase price. The product/illustration should be based on the true open market value not the purchase price.

Buy to Let (BTL) and Consumer Buy to Let (CBTL)

The Society’s definition of Buy to Let is:

The applicant(s) have purchased/are purchasing the property intending to let it out as a business / investment proposition.
If re-mortgaging the property, they are doing this for business / investment purposes

The Society’s definition of Consumer Buy to Let is:

The applicant(s) are re-mortgaging a property that they (or a close relative) have previously resided in, or that they have acquired by means other than purchase e.g. an inheritance
They did not purchase the property with a view to letting but are doing so because of a circumstance they have found themselves in and therefore an ‘accidental landlord’.
They are letting the property to a family member
They are not letting the property as part of their trade, business or profession

The Society may consider BTL and CBTL applications subject to the following:

Maximum LTV 80%.
Minimum Value £120k.
Minimum advance £80k.
Maximum loan £1.2m.
Minimum term 1 year.
Maximum term 40 years.
Maximum total loans £2.3m (to any individual or connected counterparties).
Maximum number of mortgaged BTL properties within their portfolio is 3.
Minimum income £20k sole or £25k joint at the time of application (to be verified as per standard criteria).
25% exposure concentration on any one development (unless in a PR postcode area when a business case can be referred to Credit Risk Committee and Board for approval).
Maximum 6 Bedrooms.
Property must have an Energy Performance Certificate (EPC) EPC rating of E or above
Assured Shorthold Tenancy only (1 AST per property).
Interest coverage ratios (ICRs):
If the applicant(s) are basic rate tax payers, rental yield must cover 125% of stress tested mortgage interest payment.
If one or more of the applicants are higher rate tax payers, rental yield must cover 148% of the stress tested mortgage interest payment.
Applicant(s) can afford the mortgage payment on interest only when stress tested at the higher of pay rate +2.00% or 5.5%.
Can be interest only – no need for £50k equity and may use sale of mortgage property as repayment vehicle.

Shared Ownership

The Society will consider applications for House Purchase under the Help to Buy: Shared Ownership scheme in England and Wales only (excluding London, Outer Metropolitan and Outer South East):

Loan to Share

Minimum Loan of £50,000
Minimum 25% of Property Value
Maximum 75% of Property Value

Loan to Value

Maximum of 90% of purchased share

Term

Maximum 40 years

Property

For properties being offered for sale by landlords participating in grant funded schemes in England or Wales Schemes and/or;
Properties where able to demonstrate that their lease meets those of the Standard Lease requirements and includes the Mortgagee Protection Clause.

Repayment method

Repayment method must be Capital & Interest

The Society will also consider Remortgages/Additional Borrowing subject to the following:

Loan to Value subject to a maximum of 90% of current or proposed share
Subject to Shared Ownership permitted staircasing

Available to customers who meet the Credit Renew criteria (subject to product availability)
Later Life lending permitted (subject to LTVs for this type of lending)
Not available on a Joint Borrower Sole Proprietor or Guarantors basis
Not available for shared ownership schemes that restrict the level of equity that can be purchased or where Section 106 agreements include additional restrictions on purchasers both on initial purchase and subsequent sales

Property Criteria

New Build Properties

Type	Maximum LTV	Further Information
New Build Houses	95% (Subject to product availability)	Minimum value £100,000 If leasehold, must have minimum of 85 years remaining at end of the contractual mortgage term
New Build Flats/Maisonettes	80% (Subject to product availability)	Purpose built flats not accepted Will consider Conversions and Maisonettes subject to: Minimum Value £100,000 Maximum number of 6 floors (the ground floor counts as the 1^st floor) If the property is on or above the 4th floor, the property must be serviced by a lift Must be leasehold and have a minimum of 85 years remaining at end of the contractual mortgage term May be considered over commercial unit provided: High quality and desirable development Commercial units on ground floor only and subject flat not directly over the commercial unit Type of commercial units unlikely to have an adverse impact on re-sale.
New Build Studios	80% (Subject to product availability)	Purpose built flats not accepted Will consider Conversions and Maisonettes subject to: Minimum Value £100,000 Maximum number of 6 floors (the ground floor counts as the 1^st floor) If the property is on or above the 4th floor, the property must be serviced by a lift Must be leasehold and have a minimum of 85 years remaining at end of the contractual mortgage term May be considered over commercial unit provided: High quality and desirable development Commercial units on ground floor only and subject flat not directly over the commercial unit Type of commercial units unlikely to have an adverse impact on re-sale. Minimum 30m2 internal floor space. Must have separate food preparation, washing and toilet facilities

Acceptable new build warranty providers are NHBC, Self-Build Zone, Premier Guarantee, LABC, Titan, Protek, Global Home Warranties Ltd and International Construction Warranties Limited.

Non New Build Properties

Type	Maximum LTV	Further Information
Non-New Build Houses	95% (subject to product availability)	Minimum value £100,000. If leasehold, must have a minimum of 85 years remaining at end of the contractual mortgage term
Non-New Build Flats/Maisonettes	80% (subject to product availability)	Purpose built flats not accepted Will consider Conversions and Maisonettes subject to: Minimum Value £100,000 Maximum number of 6 floors (the ground floor counts as the 1^st floor) If the property is on or above the 4th floor, the property must be serviced by a lift Must be leasehold and have a minimum of 85 years remaining at end of the contractual mortgage term May be considered over commercial unit provided: High quality and desirable development Commercial units on ground floor only and subject flat not directly over the commercial unit Type of commercial units unlikely to have an adverse impact on re-sale.
Non-New Build Studios	80% (subject to product availability)	Purpose built flats not accepted Will consider Conversions and Maisonettes subject to: Minimum Value £100,000 Maximum number of 6 floors (the ground floor counts as the 1^st floor) If the property is on or above the 4th floor, the property must be serviced by a lift Must be leasehold and have a minimum of 85 years remaining at end of the contractual mortgage term May be considered over commercial unit provided: High quality and desirable development Commercial units on ground floor only and subject flat not directly over the commercial unit Type of commercial units unlikely to have an adverse impact on re-sale. Minimum 30m2 internal floor space. Must have separate food preparation, washing and toilet facilities

Self-Build/Custom Build

The Society offers self-build and custom build loans exclusively through Buildstore/Buildloan.

Flying Freehold

Flying Freehold of up to 20% may be considered.

Builder Gifted Incentives

Incentives may be acceptable up to the value of 5% of the purchase price.
Incentives are defined as stamp duty, white goods, carpets, and curtains etc. and must not include a discount to the purchase price.
No part of the incentive can be used as deposit.

Solicitors

The Society operates a managed panel of Solicitor’s/Licensed Conveyancer’s via Legal Marketing Services Ltd (LMS).

Applicants have the following options when choosing a Solicitor/Licensed Conveyancer:

Instruct an approved Solicitor/Licenced Conveyancer from the Society’s panel or;
A ‘non-panel’ Solicitor may be used providing a ‘panel’ Solicitor is also instructed to act on the Society’s behalf.
Panel Solicitors/Licenced Conveyancers must meet the following criteria:
o Have 4 or more partners;
o Be registered with the Law Society (www.lawsociety.co.uk) or Council of Licensed Conveyancers (www.conveyancer.org.uk);
o Have minimum professional indemnity insurance cover of £2m.
o Professional Indemnity Claims – a maximum of 1.5% of all residential conveyancing claims from the last 12 months purchase completions.
o No Disciplinary Sanctions for partner or residential conveyancing related, fraud or client account related.
o DPA Breaches below 1% of the last 12 months completions.