05 June 2017
From Monday 5 June, Halifax are making changes to introduce a new process for existing mortgage customers moving home who fail affordability on a new mortgage application. This will allow these customers to proceed with a new mortgage subject to meeting certain criteria. Also a new decline message is being introduced where the intermediary completes any customer’s Country of Residence as non UK.
Existing customer affordability
- Currently, existing mortgage customers looking to move home who fail affordability on a new mortgage application will be declined
- This change enables some of these clients to be automatically accepted, and the affordability result overridden
- If an Alternative Lending Proposal (ALP) is received on a new application where one or more applicants are an existing Halifax mortgage client please review the criteria below which will be updated on the Halifax Intermediaries website on Monday 5 June.
In order for an affordability fail to proceed, all of the criteria below must be met:
- Loan amount - no increase in borrowing. A new mortgage loan amount must be less than or equal to the existing mortgage balance
- Monthly Payment - new monthly payment no more than 5% above existing payment
- Term - no increase in term for interest-only applications, for a full repayment application the term can increase, provided the new mortgage is not Lending into Retirement
- Arrears - no current arrears on existing mortgage
- LTV - an increase of up to 10% in loan to value (LTV) is acceptable, where the new LTV does not exceed 60% LTV for example: 45% to 55% LTV would be acceptable. Where the new LTV is above 60% there can be no increase above the existing LTV. The existing mortgage LTV will be calculated based on the sale price of the property
- Repayment basis - no changes allowed
- Affordability - maximum income multiple of 4.75x.
There will be no discretion to proceed outside of this criteria.
To proceed with an application which meets all the criteria a full application should be submitted
Please ensure you consider the full financial circumstances of the customer before submitting an application.
Non UK Residents
- In order to prevent applications progressing where an applicant is not currently a UK resident a decline message will show: “The application cannot proceed as applicant’s name is not currently resident in the UK”
- Members of the British Armed Forces posted abroad with a BFPO address are deemed to be UK residents and should therefore be keyed with Country of Residence as UK.
All mortgage customers must be resident in the UK and this rule will ensure any applications where this is not the case are declined at the earliest opportunity.
If you have any queries, please speak to your Business Development Manager or visit them online.