Appendix 2 – Lending – indicative limits
| Traditional |
Limited |
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|---|---|---|---|---|
| Lending types | Normal loan to value at origination and other limits applying |
Asset limits as % total loan book |
Normal loan to value at origination and other limits applying |
Asset limits as % total loan book |
| Prime owner-occupier (Note 3) |
In total (max 95% LTV) of which |
>=80% |
In total (max 100% LTV) of which: |
>=65% |
| <= 80% LTV, or >80% to 95% LTV with external insurance |
>=70% |
<= 80% LTV, or >80% to 100% LTV with external insurance |
>=50% |
|
| > 80% to <= 90% LTV without external insurance |
<=10% |
> 80% to <= 95% LTV without external insurance |
<=15% |
|
|
Prime Buy to Let to individuals (Notes 1 and 4)
|
In total (max 70% LTV) of which |
<=20% |
In total (max 80% LTV) of which |
<=30% |
| <= 70% LTV |
<=20% |
<=80%LTV >65% and <=80% LTV |
<=30% <=20% |
|
| <=70%LTV at portfolio level |
<=5% |
<=75%LTV at portfolio level |
<=10% |
|
| Impaired credit history (all types) |
N/A |
0% | LTV <= 70% |
<=10% |
| Shared ownership (Note 3) |
<= 90% of share purchased by borrower |
<=10% |
<= 95% of share purchased by borrower |
<=15% |
| Shared equity (Note 3) |
0% | < 25% equity share |
<=5% |
|
| Social Landlords |
<= 80% LTV | <=7.5% | <= 80% LTV |
<=15% |
| Self-build (in construction phase) actual lending plus committed lending (Note 3) |
<=80% LTV |
<=7.5% |
<= 85% LTV |
<=15% |
| Commercial/FSRP/FSOL |
FSRP Investment/rented <=70% and/or FSOL Owner occupied <= 50% LTV (max £1m per loan connection) |
<=5% |
FSRP Investment/rented <=80% and/or other FSRP/FSOL <= 60% LTV |
<=10% |
|
Lifetime mortgages: (Note 2)
|
None |
0% | None | 0% |
|
Lending in retirement (Notes 2,3,4)
|
None | 0% | <= 70% LTV (min age of youngest applicant 60) |
<=5% |
|
<= 70% LTV |
<=15% | <= 70% LTV |
<=20% |
| Lending into retirement (Notes 3&4) |
<=75%LTV |
<=20% | <=80%LTV |
<=25% |
| Non-sterling mortgages |
N/A |
0% | Only where borrower also has income in the relevant currency | <= 5% |
| Mitigated |
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| Own board-approved comprehensive limit structure, in compliance with statutory requirements and covering both stocks and flows of specified lending types. Limits need to be broken down by borrower type and risk mitigant requirements (security, insurance etc.) (see Notes 2 and 3) |
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| In this table: FSRP = fully secured on residential property; FSOL = fully secured on other land, Shared ownership = part-owned by the occupier and part by a social housing provider. Shared equity = where the society takes a part equity interest in the property. |
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| Note 1: For details of interest coverage ratio (ICR) calculation and expectations, see SS13/16 paragraphs 2.3-2.7. |
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| Note 2: Lifetime mortgages at fixed rates, with or without interest roll-up, and loans in retirement at lifetime fixed rates are only expected to be undertaken by societies capable of operating on the Comprehensive approach to financial risk management. |
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| Note 3: Self build, shared ownership, shared equity, lending in retirement and lending into retirement can be included as sub-sets of prime owner occupier lending within the overall indicative limit for such lending. |
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| Note 4: It is acknowledged that, on initial implementation, societies may not have a breakdown of the number of mortgaged properties per existing BTL borrower, nor of borrower retirement details for existing loans in/into retirement. Initially, societies therefore may need to adopt their own assumptions for calibrating internal limits for these categories, whilst implementing the data collection necessary to phase in monitoring of the position against the SS expectations in due course. This method also meets expectations for the phased implementation of SS13/16 on BTL underwriting. | ||||
- 01/01/2021