Bank of Scotland has amended its special status product, and effectively made an entrance into the self-certification market, writes Paul Robertson.
The lender’s special status product did not previously ask for any income details, asking only for the client’s employer’s name or what the individual was trading as. This has now been altered and borrowers must declare income from all sources.
John Lloyd, director of sales at Bank of Scotland, said: ‘This product is still called special status, but what we have done is effectively changed it to a self-certification product, where we now require the borrower to put in an income figure on the application form.
As a result of this tighter criteria, clients are now able to borrow larger sums. Lloyd said: ‘Under the old product with no income declared, the maximum LTV we could do was 80%, but we are now able to lend up to 85% LTV.’
In addition to this, all Bank of Scotland mortgages will now be available on a special status basis up to 85% LTV.
This change will ensure Bank of Scotland complies with a clause in CP98 which relates to responsible lending. The clause could potentially rule out lending without an income declaration. Referring to page 78 of the draft rules, Jackie Blythe, spokesperson for the Financial Services Authority (FSA), said: ‘Nothing is set in stone because we are still consulting on the draft mortgage rules. The FSA has no intention of preventing legitimate self-certification lending, but will require lenders to show they have taken account of customers’ ability to pay the loan. Of course these rules are not binding on lenders now, and even if the final draft has this rule, it will not come into force until August 2002.’