Lending criteria

Need To Know
  • Welcome to our new look Intermediaries website

TFI standard mortgages - lending criteria:

Below you'll find details of lending criteria for the standard mortgage range available from TFI, applicable to teachers and those of other professions.

  • Minimum age: 18
  • Maximum age: 83 (at end of term)

For Help to Buy and Shared Ownership, see relevant sections below.

  • Maximum of 4 applicants per application
  • All applicants must reside in the property at completion, except where a family member is looking to assist. Refer to Family Assist (JBSP)
  • 100% income from 2 earners can be used with 50% of one further applicant
  • Where a couple are married or in a long-term relationship (co-habited for a period of 12 months or more) both parties must be named on the mortgage except where an applicant does not have permanent rights to reside in the UK. In all cases, affordability is based on the number of people residing in the property (refer to Dependants)

Financial commitments such as loans and credit cards can be excluded where these have less than 6 months to run or are to be repaid at completion. Hire Purchase agreements can only be excluded in cases when these will not need to be replaced/renewed.

Childcare costs can be reduced/excluded where it is clear these will cease or reduce within the next 6 months due to:

  • The child's age.
  • A change in the employment circumstances of an applicant which have been taken into account for affordability.
  • Applicants are relocating closer to family in order to assist with childcare.

In all cases, full details must be provided.

  • No IVA or Bankruptcy Order having been in force or outstanding at any time within the last 5 years
  • No repossession in last 5 years
  • No CCJs outstanding in the last 3 years 
  • No defaults outstanding in last 3 years (single defaults for communication suppliers ignored if under £100)
  • No debt management plans outstanding in last 2 years
  • No missed mortgage payments in the last 3 years or, in the case of existing customers, up to 2 consecutive missed mortgage payments can be considered within the last 2 years subject to none in the last 6 months
  • No missed loan payments in the last 12 months and no more than 2 consecutive missed loan payments within the last 2 years
  • No more than 1 missed credit card payment in the last 3 months and no more than 2 consecutive missed credit card payments in the last 2 years
  • Conduct of current account including exceeding/reliance on overdraft, returned payments and adverse spending habits such as gambling will be at the discretion of the underwriter


For our Back on Track range, the following applies:

Type Criteria 
 IVA & Bankruptcy None outstanding in the last 3 years
 CCJs
 satisfied/unsatisfied 
 Maximum 1 in last 3 years not exceeding £500
 Property repossession None in last 6 years
 Registered defaults None outstanding in last 2 years. Up to 1 default with max
 value of £100.
 Debt management 
 plans
 None outstanding in last 12 months
 Missed mortgage/loan
 payments
 No more than 2 consecutive in last 2 years. None in last 3
 months
 Missed credit/store
 cards
 No more than 2 consecutive in last 2 years. Max missed 2
 payments overall in last 6 months
 Maximum LTV Limited to 80%
 Maximum LTI Limited to x 4.5

 

  • A minimum of 5% deposit from an applicant's personal funds or gift is required in addition to any funds received under government loan schemes (see Help to Buy), forces help to buy (see Forces Help to Buy) or builders' incentives (see New Build)
  • Private vendor deposits are not acceptable
  • Deposit funds raised by an applicant through an unsecured loan facility (e.g. personal loan with a bank) are not acceptable
  • Where a gifted deposit is being provided, the Society's pro forma gifted deposit form must be completed
  • The person providing the gift is limited to parents, grandparents, siblings, aunts and uncles
  • Gifted deposits are allowed only from EU countries, United States of America, Canada, Australia and New Zealand. Other countries will be at the discretion of the Credit Committee
  • If the deposit is from outside the UK, this must be evidenced via the applicant's UK bank account and, if the country is non UK speaking, a certified translation should be obtained

 

The Society will accept gifted deposits that are subject to a 2nd charge subject to the following:

  • No other interest or claim will be made upon the property, the funds are from a family member and the only condition is repayment of the original sum of the funds being gifted upon the sale of property and is not subject to any interest, charges or repayments
  • Where the property is being sold to the applicant at a reduced purchase price and the deposit is, in effect, equity, regardless of whether the full or reduced purchase price is recorded on the Transfer Deed - please refer to Sale Under Value

For affordability purposes, the household composition is based on the number of adults and children who will reside in the property on a regular basis following completion, regardless of their employment status. Adults over the age of 18 not named on the mortgage such as adult children, short-term partners and lodgers can be excluded where it is confirmed by the applicant they are self-sufficient and do not add to household expenditure. Where an applicant is committed to supporting a child at University who will not reside in the property during term time, the expenditure should be included as committed expenditure item childcare/school fees.

A non-occupying applicant can be named on the mortgage, and be used to assist with affordability, but not be a legal owner of the property (referred to as Joint borrower/sole proprietor) subject to the following:

  • max LTV 80%
  • The non-occupying applicant(s) being a parent(s)/grandparents(s) of one of the occupying applicants.
  • The number of non-occupying applicants not to exceed 2. With a maximum of 4 applicants on the mortgage in total
  • 100% of the income, allowed under policy, from all applicants can be used for affordability purposes
  • The affordability assessment to be compliant with MCOB and cover expenditure for both the applicants and the parent(s)/grandparent(s) households.
  • A recommendation to be included in the mortgage offer that the parties to the mortgage discuss/agree their personal future ‘exit’ plans separately to the legal requirements/obligations under the mortgage.
  • The Society receiving independent legal advice that:
    The applicant understands that they will have no beneficial interest in the property
    Acknowledges that they are joint and severally liable for payments on the full mortgage if the Sole Proprietor is unable to make them at any point during the mortgage term
    Is not a vulnerable individual, or has been coerced into agreeing to be a joint borrower
    It has been highlighted that there could be a reduction in the value of their own estate by virtue of funding a property they won’t own and the potential for family disputes (siblings set against one another)
They have been recommended to take independent tax advice

Lending will be on the basis of specific ‘Family Assist’ products which have been appropriately risk priced by the Product Governance Committee.

The assistance cannot be used in conjunction with any other home ownership scheme such as shared ownership or help to buy

Note: Where a parent(s)/grandparent(s) requests to be named as joint legal owner this is permitted, with all above criteria points available to the parent(s)/grandparent(s), with the requirement for independent legal advice removed. In this instance it will be necessary for the Solicitors acting for the parent(s)/grandparent(s) to confirm that:

The parent(s)/grandparent(s) understand that they will be joint and severally liable for payments on the full mortgage even of the child is unable to make them at any point during the mortgage term.

  • Application fees and valuation fees cannot be added to the loan
  • Arrangement fees can be added subject to this not increasing the level of borrowing beyond the LTV applicable to the product sold where this is at 90% or 95%. 
  • For 80% products fees can be added to the loan and remain on an <=80% LTV product even if it takes the LTV over 80%, but must be covered by MIG (and will be reported as a >80% LTV with insurance)

Deposit provided under the Forces Help to Buy scheme are acceptable. The deposit is provided interest free repayable in monthly instalments over a 10 year period. The instalment should be classed as a financial commitment for affordability purposes. 

The scheme can be used in conjunction with other affordable housing schemes subject to the applicant providing a 5% deposit in the form of savings or a gift from a family member.

This Society does not lend on mortgages classed as a Foreign Currency Mortgage under MCOB/MCD.

  • Applicants from the EU, EEA or Switzerland, who resided in the UK prior to 31st December 2020, must have been granted settled status in the UK and provide evidence of the same.
  • For applicants outside of the EU, EEA or Switzerland, or who arrived from the EU, EEA or Switzerland after 31 December 2020, proof of indefinite leave to remain, permanent rights of residency or settled status is required. A copy of the customer’s passport, and or residence permit, including the relevant Home Office/Immigration Department stamp or confirmation of settled status must be provided.
  • All applicants must have lived in the UK for a minimum of 6 months prior to application.

Lending is permitted in England and Wales, excluding islands off of Great Britain (other than the Isle of Wight and Anglesey).

Not available.

The Society will accept applications for HTB England, Wales & England administered through the Homes and Communities Agency.

  • Customer must provide 5% deposit in addition to any equity loan received
  • Maximum age at end of term is 70, or retirement date if earlier
  • Where the equity loan has less than 15 years to run, consideration of how the equity loan will be repaid must be included in the assessment of affordability

Max 5x LTI. All income should be annualised.

Minimum Income: One applicant must earn a minimum of £13K pa

Primary Income Types

100% of income can be used

Conditions

Evidence
3 months bank statements are required for all applicants showing relevant salary credits. Additional requirements are detailed below.

Permanent Employment – basic salary

Those employed on a permanent, open ended contract. Accepted within probation period excluding temp to perm.

Last 3 months payslips if available or available payslips and Signed Contract or letter of confirmation of employment previously sent to applicant.

Employed by family business

Where shareholding is less than 20% applicant must have been employed by the firm for 3 months on the salary used for affordability and the level of income must be consistent for the type of work/experience of the applicant.

Where the applicants shareholding is 20% or more treat as self employed.

Last 3 months payslips & last 3 months bank statements.

Newly Qualified Teacher (1year contract)

Contract must be 1 year fixed term contract.

Where 1 year fixed term contract offered as Maternity cover, and contract states can be ended earlier on return of post holder, this is acceptable subject to the Head Teacher confirming it is anticipated employment will run for the full academic year.

Last 3 months payslips if available or available payslips and Signed Contract.

Where an NQT has yet to start employment evidence they have passed their PGCE is required prior to offer.

Fixed term contract (PAYE)

12 months contract history with current employer, or for qualified teachers 12 months current history of teaching, with 6 months remaining on current contract at application. Alternatively 18 months contract history in same line of work and 6 months remaining on current contract at application.

Last 3 months payslips and copy of signed current and previous contracts covering the required periods.

Completion or contractor Declaration

Self Employed

Average of last 2 years Self Assessment Tax Calculation (SA302).

Most recent income proofs no more than 18 months before the date of the application.

Where there is a variation of more than 20% from one year to another an explanation must be provided.

Greater flexibility may be considered for HNW / higher earning clients under our complex lending range.

Last 2 years SA302 plus Tax Year Overviews

In addition for LTD companies last 2 years full accounts signed by a suitably qualified accountant.

Music Teachers

6 months history required. Combination of, or either, employed and self employed income can be used. Average of last 6 months annualised.

Evidence of last 6 months income.

Supply

2 Academic terms in area purchasing.

Take total pay earned over last 2 terms, divide by total number of available weeks in terms and times by 38.

Payslips covering 2 academic terms

Completion of supply worker declaration

Bank Nurse

6 months history in area purchasing. Average of last 6 months annualised

Last 6 months payslips

Locum

6 months history in area purchasing. Average of last 6 months annualised.

Last 6 months payslips

Private/company pensions and annuities

Must be payable for duration of mortgage.

See Retirement

Projected

Full Pension projection from the pension company confirming the pension amount and period that pension will be paid.

Current

Last 3 months bank statement evidencing the payment from the pension company together with full annuity/pension letter confirming pension amount and period that pension will be paid.

Note:
Pension/annuity letter may not be handwritten or amended and must show the applicant's name and address which must match that stated on the application form it should also show pension/annuity company's name, address, telephone number and company's registration number (if Limited) and be on headed paper or show company stamp.

Completion of lending into retirement declaration

State Pension

See Retirement

Payments evidenced from last 3 months bank statements for assessing future affordability in retirement Individual personal projection through Government web site required showing customer NI number

Completion of lending into retirement declaration

Other

Car Allowance

Shown on last 3 months payslips

Last 3 months payslips

Regular Shift Allowance

Average of last 3 months payslips

Last 3 months payslips

TLR (Teacher Learning & Responsibility)

Shown on last 3 months payslips

Last 3 months payslips

Mortgage Subsidy

Shown on last 3 months payslips

Last 3 months payslips

London Weighting/Large town Allowance

Shown on last 3 months payslips

Last 3 months payslips

Child Benefit* not available where either applicants income exceeds £50K

Available where the child is aged 13 or under at point of application

Payments evidenced from bank statements

Second Job – where zero hours/temporary restricted to 60%

Must meet conditions for type of employment and been carried out in conjunction with main job for period of 3 months

Last 3 months payslips

Cabin Crew Allowance

Average of last 3 months payslips

Last 3 months payslips

Flight Attendance Allowance

Average of last 3 months payslips

Last 3 months payslips

NHS Banding/Enhanced Pay

Average of last 3 months payslips

Last 3 months payslips

Other allowances which are consistent – excluding expenses. For workers employed by the NHS and Police 100% of all income can be used

Average of last 3 months payslips.

Last 3 months payslips

Stipend received by Clergy

 

Last 3 months payslips or bank statement entries

 

Secondary Income Types

60% of income can be used.
Must be supported by a Primary Income type.

Conditions

Evidence
3 months bank statements are required for all applicants showing relevant salary credits. Additional requirements are detailed below.

Overtime

(For workers employed by NHS or Police 100% can be used)

Average of last 3 months to be used

Last 3 months payslips

Monthly Commission/Bonus

Average of last 3 months to be used

Last 3 months payslips

Quarterly Commission/Bonus

Average of last 2 quarters to be used

Payslip showing last 2 quarterly payments

Annual Commission/Bonus

Greater flexibility may be considered for HNW / higher earning clients or financial services employees under our complex lending range.

Payslip showing last annual payment

Child Maintenance

Available where the child is aged 13 or under at point of application.

Must be on each of last 3 months bank statements. Where amount varies use lowest amount.

Not available on lending over 90% or shared ownership

Evidenced from last 3 months banks statements

Zero Hours/Temporary Contracts

12 months employment history must be evidenced with same employer or in same type of work

Last 12 months payslips

Lodger Income (Re-mortgage only)

Lodger must not be related to applicants and must sign consent to mortgage form.

Not available on lending over 90% or shared ownership

Evidenced from last 3 months bank statements

Tax Credits

Lowest Projected figures contained in the award notice to be used.

Available where the child is aged 13 or under at point of application.

Award notice must reflect, broadly, circumstances under which mortgage is applied under for relationship status, income and childcare costs.

Not available on lending over 90% or shared ownership

Full Tax Credit Award Notice

Stipend / Bursary

12 months remaining

Not available on lending over 90% or shared ownership

Letter confirming amount, frequency and award period.

DLA/PIP

Must be in relation to the applicant or a dependant.

Not available on lending over 90% or shared ownership

Evidenced from last 3 months bank statements and award letter

 

Future Income

NEWLY QUALIFIED TEACHERS

Newly Qualified Teachers can complete 2 months before their role commences subject to evidence being received that they have passed their PGCE prior to the mortgage offer being issued.

OTHER APPLICANTS

Where an applicant is commencing new employment completion is unaffected subject to the mortgage being affordable on both the current salary and future salary. Where affordability is reliant on the new salary completion can take place 2 months before the new role commencing subject to the applicant being currently in employment.

For applicants employed by a family business 3 months employment history evidenced by payslips and bank statements is required.

Where an applicant has been awarded a pay rise with their current employer the most recent payslip showing the increase or award letter sent to the applicant must be provided.

For applicants employed by a family business 3 months history of the pay increase must be evidenced by payslips and bank statements.

Interest only is considered for HNW / higher earning clients under our complex lending range.

  • For new build properties, we require that the lease should be a minimum of 125 years
  • For properties owned previously, a minimum term outstanding on the lease when the mortgage starts should be 80 years
  • Ground rent should not exceed 0.25% of the market value of the property

    Example:
    If the market value of the property is £150,000, the initial ground rent cannot exceed £375 per year (e.g. £150,000 x 0.25% = £375).

  • If the lease contains a clause confirming that ground rent can be reviewed, we require that the reviews cannot occur more frequently than once every 10 years
  • Any increases should be limited to the rate of inflation as measured by the Retail Price Index (RPI) or equivalent
  • If event fees are charged for changing the terms of the lease (​e.g. to extend or alter the property), Teachers Building Society requires that the fees must be based on reasonable cost of the administration of such changes

  • House ​purchase available up to 95%
  • Remortgage available up to 95%
  • Remortgage with capital raising available up to 90%
  • Capital raising acceptable for home improvements, debt consolidation and for releasing equity to provide a deposit for a separate house purchase by the applicants or their children, grandchildren. Capital raising is not permitted where the funds are for business purposes.

MINIMUM LOAN SIZES

New Advance: £20,000
Further Advance: £5,000
 

MAXIMUM LOAN SIZES

LTV

5 x LTI

4 x LTI

0-80

£1,500,000

N/A

80.01-90

£450,000

£500,000

90.01-95

£350,000

£400,000


A higher loan size may be considered for HNW / higher earning clients under our complex lending range.

LTV
Restriction

60% – 90%

Restriction when lending in or into retirement (refer to Retirement)

90% – 95%

No lending past retirement or age 70.

Must be only property owned

Earned income and child benefit only.

Age at expiry of mortgage not to exceed 70

For re-mortgage cases no additional borrowing allowed.

If returning to work within 2 months, full pay can be used subject to reference.

For all other cases, full affordability should be based on future plans, e.g. situation after maternity, childcare costs etc. with evidence of the ability to make mortgage payments whilst on maternity.

Incentives such as payment of stamp duty and legal fees are acceptable up to 5% of the purchase price. Incentives totalling greater than 5% must be referred to the Society. The purchase price must be that entered on the Mortgage Deed. Incentives must be disclosed to the valuer with lending based on the valuation figure provided.

Mortgage offers are valid for a period of 6 months to allow for completion of the property.

In all cases:

Houses

Max LTV 90% (95% of share for shared ownership)


Flats

Max 85% on open market

Help to Buy max 75% LTV (95% of share for shared ownership)

Not acceptable if used in the last 12 months

Unacceptable Property Types

  • Property value less than £60,000.00
  • Properties not in a habitable state
  • Freehold Flats/Maisonettes/Common hold Tenure unless:
    There is a leasehold interest in the flat and the freehold relates to a share of the freehold interest in the block which does not comprise of more than 4 units.
    The other flats in the block are all leasehold and the applicant will own the overall freehold which will form part of the security and the block does not comprise of more than 4 units.
    The property is one of two flats and there are reciprocated lease/freehold reversion arrangements. (such as a Tyneside Flat arrangement).

     
  • Leasehold properties with less than 80 years left on the lease
  • Properties with Agricultural Restrictions/ties
  • Small Holdings
  • Live/work units or properties with mix of residential and commercial
  • Mobile homes/river boats
  • Farms where the farm and accommodation are together
  • Flats in buildings which have more than 6 floors. For buildings over 4 floors the building must contain a lift.
  • Studio/Basement Flats <30sqm
  • Bedsit
  • Properties above or adjacent to commercial premises which are likely to have detrimental impact on the enjoyment of the property.(ie fast food outlets/public houses)
  • Properties designated defective under the Housing Act 1985
  • Concrete or steel framed houses
  • Any property the Valuer and/or Society deem not to be suitable security. This could be due to a combination of property aspects that could reduce desirability..

Acceptable Property Types With Restrictions

  • New Build House max 90% LTV (95% shared ownership)

  • New Build Flat max 85% LTV (95% shared ownership)
  • Studio Flats >=30sqm max 80% - Purpose built only
  • Properties with Deck Access max 80% LTV
  • Flying freeholds subject to only part of the property being affected and the existence of rights of support, entry and repair enforceable by covenant.
  • Coach House freehold flats subject to the garages underneath being subject to a long lease.
  • Properties above/adjacent commercial deemed acceptable max 75% LTV
  • Flats in commercial/office conversion max 75% LTV
  • Thatched and timber framed properties, the latter subject to valuers comments
More complex property types such as mixed use, property with acreage, an annex or conversions can be considered for HNW / higher earning clients under our complex lending range.

Applicants must have resided in the UK for 6 months. For non UK nationals, refer to Foreign Nationals.

For all lending where the mortgage term exceeds age 70, or retirement date if earlier, affordability must meet based on pre and post retirement income. Pension income must be evidenced by either bank statements for current pensions or projections for future pensions.

Those already retired or where the mortgage term goes into retirement or exceeds age 70

  • Maximum lending age at end of term of 83
  • Maximum 70% LTV
  • Lending into Retirement Declaration to be submitted with application (intermediary cases only)
Greater flexibility may be considered for HNW / higher earning clients under our complex lending range.

  • Loans may be provided up to 75% of the valuation of the property - no lending over the purchase is allowed
  • The name of the applicants must fully match those on sale document
  • Where the property is still within the pre-emption clause, we will require a Deed of Postponement

Where a property is being purchased under current market value this is only acceptable where:

  • The vendor is an immediate family member
  • The mortgage offer being subject to a Declaration of Solvency being obtained, together with a suitable indemnity policy against the effects of Section 339 of the Insolvency Act 1986

For LTV purposes, the full market value can be used subject to this being materially different than the reduced purchase price (minimum 20%). No additional personal deposit is required.

Cases where the applicant is an existing tenant and purchasing the property at below market value can be considered where the lending and LTV is based on the purchase price (monies changing hands) with the applicant's deposit funds evidenced and the Declaration of Solvency offer paragraph being included in the offer as detailed above.

Second home loans may be considered subject to affordability and up to 75% LTV where the property being purchased is primarily for the use of the applicant(s) such as a holiday home or where an applicant works away from home and property is being purchased closer to an applicant's place of work.

See Income.

Max 95% of share being purchased (see criteria for 95% lending under LTV Restrictions)

  • Earned income and child benefit only
  • No other properties owned
  • If remortgaging, can only raise additional borrowing for stair casing (buying an additional share of the property)
  • Lease must contain Mortgagee Protection Clause and landlord will undertake to notify the Society in advance of any action for forfeiture of the lease
  • Applicants must be able to staircase up to 100%
  • Max age at end of term 70 or retirement age if earlier

Minimum term: 5 years
Maximum term: 40 years

A shorter mortgage term maybe considered for HNW / higher earning clients under our complex lending range.

For properties under 10 years old, including new builds, the following Warranties are acceptable:

  • NHBC Buildmark
  • Premier Guarantee
  • Zurich Municipal
  • Building Life Plan (BLP)
  • LABC Warranty
  • Build Zone 10 year warranty
  • Checkmate New Home Warranty
  • International Construction Warranties (ICW)

Other mainstream warranties/Architects Certificates will be considered on their own merits.

Lending critera - buy to let

The Society lends on:

  • BTL’s on a Single Assured short hold tenancy of no more than 12 months;  and 
  • Holiday Lets defined as a property that will only be occupied on short term lets of less than 1 month’s duration for holiday purposes
  • The Society lends on BTL’s classed as Consumer BTL
  • The Society does not lend on BTL’s regulated under MCOB
  • The Society does not lend on BTL’s where there are multiple tenancies or where the property is classed as an HMO (House in multiple occupation)
  • BTL mortgages are only available to customers who will hold, personally or via limited companies, 3 or fewer mortgaged BTL properties following completion of the transaction with the exception of existing portfolio landlords with the Society who can demonstrate a long term understanding of the BTL sector. In these cases a full assets and liabilities sheet will be obtained. This does not apply when assessing Holiday Lets.
Maximum age at
end of term
83

Minimum age

25 at application

Minimum income

1 applicant must earn, from employment, a minimum of £25,000 
or both applicants between them a minimum of £40,000. Where
term exceeds the age of 70, pension income in retirement must
also meet these limits. 

Minimum property
value
£75,000
Maximum loan £1,000,000
Minimum loan £50,000 
Maximum LTV Purchase: 75%    Remortgage: 75% 
Maximum term 40 years 
Stress rate 5.5% or 2% higher than pay rate, whichever is greater 
Repayment type Available on capital and repayment or interest only. Sale of
property can be used as the repayment vehicle. 
Restrictions 
  • Not available for debt consolidation
  • Private individuals only
  • Not available on new build
  • Not available on bed sits or studio flats
  • Existing home owners only
  • Cannot be used in conjunction with other schemes (e.g.
    Shared Ownership, Right to Buy etc.)

 

Coverage ratioHigher rate tax payer: 145%
Lower rate tax payer*: 125%

*If using lower tax banding, income is evidenced by payslips,
P60 and SA302's as appropriate to each client. 

Income must include all income received and include gross
rental for BTL or holiday let to be mortgaged with the Society.

If more than 1 applicant, highest tax banding applies. 

Rental assessment

Annual rent received on an AST basis

Occupancy

Must be let on a single Assured Shorthold Tenancy of no
more than 12 months to a single family unit. Multiple
tenancies or properties classed as HMO's are not acceptable.

If you would like to print the full lending criteria page, please click 'expand all' at the top of the page before printing.