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Woolwich issues brokers further MMR guidance

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  • 24/03/2014
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The Woolwich has made further changes to its lending standards ahead of its Mortgage Market Review policy taking effect from 31 March.

For self-employed applications partners are now required to provide both SA302s and financial accounts as income proof in all cases.

To give borrowers more flexibility these documents can now relate to a period of no more than 15 months prior to the date of the mortgage submission rather than the previous 12 month requirement.

Barclays will accept applications where deposits are funded through the Forces Help to Buy scheme, which replaces the Long Service Advance of Pay (LSAP).

Monthly repayments must be included as a commitment for affordability purposes. This scheme cannot be combined with the Help to Buy mortgage guarantee scheme.

The Forces Help to Buy scheme allows regular service personnel to borrow up to 50% of their salary (to a maximum of £25,000), interest free for 10 years. 

Any known future commitments which will become due during the term of the mortgage need to be included in the updated affordability assessment.

This includes the interest payments on shared equity loans including the Help to Build scheme.

The Woolwich affordability calculator will use 3% per annum of the outstanding balance as a commitment for affordability purposes.

Under the new rules borrowers do not need to estimate the costs of running their second mortgaged home because this will be automatically calculated by the Woolwich calculator.

If the property is held as a buy-to-let or permission-to-let has been granted these costs do not apply.

Commitments in the form of mortgage payments on the second properties or the running costs for unencumbered second properties must be entered manually as a commitment.

The term requested for applications for additional borrowing can now exceed that of the original mortgage.

This is restricted to a maximum term of 35 years and cannot exceed the maximum age of 70 at end of term, or the borrower’s anticipated retirement age, whichever is sooner.

For interest-only, Help to Buy, or Family Springboard mortgages (during the deposit period) the maximum term is 25 years.

This latest announcement follows Woolwich’s notification last week of the changes made to its Mortgage Application Express system and dates for pipeline cases ahead of the MMR implementation on 26 April.

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