Mortgage Intermediaries

For mortgage intermediary use only

Lending Criteria

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  • Above or near commercial premises  (Property details)

    Where the property is situated above or near commercial premises, the suitability of the property for mortgage purposes will be assessed by the valuer.

    Where the property is readily marketable and mortgageable we will consider lending. We may be unable to lend where the property is situated above or near such premises as fast food outlets, public houses etc.

  • Acceptable and unacceptable property types (Property details)
    Acceptable
    Conventional construction (solid wall construction and cavity wall construction)
    Pre-cast reinforced concrete (PRC), providing repaired under PRC Homes Ltd repair scheme
    New build or newly converted, subject to suitable warranty
    Period timber
    Thatched roofs
    Laing Easiform built after 1945
    Wimpy no fines
    Steel frame
    Room used as a home office
    For properties that are held on leasehold tenure there must be at least the term plus 30 years remaining on the lease (with minimum of 55 years remaining)

    Unacceptable
    Buy-to-let (BTL)
    Shared equity
    Right to Buy
    Self build
    Properties being partly or wholly used for commercial purposes
    Properties subject to a prior ranking charge
    Second / Holiday homes
    Floor area less than 30 metres squared
    Houses in multiple occupation (HMOs)
    Flats or maisonettes built of large panel systems (LPS) can be considered for houses or maisonettes not more than two storeys high, subject to structural report
    Freehold flats or maisonettes
    Where conventional buildings insurance cannot be arranged
    Mobile Homes, Houseboats etc.
    Timber frame, pre 1970 and not period timber
    More than 20% units in a block mortgaged with Tesco Bank
    Retentions
    Timber or steel frames where walls have been insulated after original construction

    Case by Case Basis
    Non-conventional construction
    No mains electricity, water, drainage - subject to individual property and assessment by valuer
    Flats above commercial property - we will not lend if the future saleability is affected
    Flats with more than 4 floors in the block. Must be serviced by a lift and subject to individual property and assessment by valuer if the flat is situated above the 4th floor. Floor count excludes ground.
    Japanese knotweed - subject to individual property and assessment by valuer
    Property in poor condition - subject to individual property and assessment by valuer
    Mining / radon gas area - subject to individual property and assessment by valuer
    Flooding - Must have building insurance without special conditions and area not prone to flooding on a regular basis
    Valuation issues e.g. structural problems, subsidence, specialist report required etc. Subject to individual property and assessment by valuer
    Property affected by agricultural restrictions/other covenants/resale conditions. Subject to individual property and assessment by the valuer. Property must be marketable and mortgageable.
  • Accountant qualifications (Documentation)

    Accountants signing and verifying applicant accounts must be a member of suitable professional body i.e.:

    • Institute of Chartered Accountants, C.A., A.C.A. or F.C.A.
    • Institute of Chartered Accountants in Scotland, I.C.A.S, A.C.A.S, F.C.A.S
    • Institute of Chartered Accountants in Ireland, I.C.A.I.
    • Chartered Association of Certified Accountants, A.C.C.A. or F.C.C.A.
    • Chartered institute of Taxation, A.T.I.I. or F.T.I.I.
    • Association of Authorised Public Accounts, A.A.P.A, or F.A.P.A
    • Chartered Institute of Managements Accountants, C.I.M.A, A.C.M.A or F.C.M.A
    • Association of Accounting Technicians, M.A.A.T or F.M.A.A.T
    • Association of International Accountants, A.A.I.A or F.A.I.A
  • Accountant’s report (Documentation)

    Accountant’s reports provided per the Tesco Bank template are acceptable as a means of verifying earnings for a self employed applicant.

    See self employed section for further information on supporting documentation requirements in full.

  • Affordability (Applicant details)

    Consideration of all applications is based on the applicant’s ability to repay the mortgage loan. Tesco Bank’s lending decision and the calculation of the amount we will lend is based on a full affordability assessment. This determines whether the loan is affordable based on the applicants income, credit commitments and household expenditure.

    100% of primary income and 60% of secondary income will be used. Please refer to our section on income types for acceptable sources of income and income weightings. The Income and ID guide PDF, 83kb also provides acceptable sources of income and income weightings. Primary Income is income that is permanent, reliable, sustainable and regular. Secondary Income is income that, whilst not guaranteed, is nevertheless regular and sustainable.

    Please note that applications will be subject to additional policy checks including maximum income multiples and debt to income ratios.

    The affordability calculator gives an illustration as to how much we will be willing to lend, subject to a full application and credit search.

  • Agricultural ties/restrictive covenants (Property details)

    Because of the very limited re-sale market for properties with restrictive covenants, Tesco Bank may be unable to accept such properties as suitable security for mortgage purposes. To be acceptable, the property must be readily marketable and mortgageable.

  • Appeals – Application decisioning and valuation (Applicant details)

    Tesco Bank will consider appeals only on the basis that new information, which was not known or apparent at the time of the application, has become available.

  • Bankruptcy, CCJ and defaults (Applicant details)Adverse, Impaired

    Applications will be declined from prospective borrowers / existing customers who have any of the following:

    • Bankruptcy
    • Repossessions
    • Satisfied or unsatisfied CCJ
    • Satisfied or unsatisfied IVA
    • More than 1 satisfied or unsatisfied default in the last 36 months
    • More than 1 satisfied or unsatisfied default of more than £400
    • Current arrears or missed mortgage payments
    • Arrears or missed payments > 3 down in the last 6 months on other individual debts identified via the credit search

    Any applications with reduced adverse information may still refer to an underwriter.

  • Bank statements - Checks on conduct and account behaviour (Income and expenditure)

    3 months personal bank statements will be requested for each applicant and should provide a means of verifying income (where applicable) and monthly expenditure. This may be from one account or a series of accounts as appropriate.

    Bank statements should be in good order; where any charges, unpaid items, excessive gambling is present, we reserve the right to decline the application.

    Online bank statements are acceptable providing they are in a PDF format, the applicant(s) name and account number are clearly shown and the statement date is displayed.

    If different, the bank account where the monthly mortgage payment will be sourced must also be provided.

  • Bed and breakfast (Property details)

    We do not lend where the property will be used as a bed and breakfast.

  • BFPO/Armed forces (Applicant details)Forces, Army

    We will consider all applications from members of the British Armed Forces. Applicants can be members of HM Forces holding a British Forces Post Office (BFPO) address.

    If the applicant intends to reside in the property long term, but will be letting it out in the short term whilst overseas we can consider this if:

    • The property is not a former or current MoD property.
    • The applicants can afford the mortgage and any accommodation costs if they stay elsewhere.
    • Rental income from the property is not to be included in income to assess affordability (unless this is required to offset additional accommodation costs from living abroad).
    • The letting policy is adhered to.

    Forces Help to Buy Scheme (FHTB) is accepted and treated the same as any other credit commitment.

  • Buildings insurance (Property details)

    It is a condition of all Tesco Bank mortgages that appropriate buildings insurance cover is held over the security property for the duration of the mortgage repayment term.

    The buildings insurance cover must be on conventional terms, policy loadings are not acceptable e.g. excessive risk of flooding.

  • Bursary income (Income and expenditure)

    We do not accept bursary income.

  • Buy-to-let (Mortgage details)BTL

    We do not lend on buy-to-let (BTL) properties.

  • Buy-to-let in background (Mortgage details)BTL

    Rental income from buy-to-let (BTL) properties can be included in the affordability assessment; however any existing mortgage debt must also be declared and treated as an ongoing credit commitment.

  • Capital raising (Mortgage details)

    We will consider remortgage applications up to our product maximum LTV where the loan is for capital raising purposes.

    We do not consider applications where the purpose of the additional funds is for commercial use to fund a business (except where used to purchase a property for buy-to-let) or for speculative purposes.

  • Commercial property- bed and breakfast, live-work units, home office, etc. (Property details)

    The property must be used solely for domestic residential purposes. Underwriters may consider where there is some incidental commercial use which is limited to one room as a home office or for business purposes but no customers will be visiting the property.

  • Commitments - Credit commitments and short term remaining debt (Income and expenditure)

    Financial commitments to be provided within the application for the purpose of assessing affordability can include, but are not limited to, the following;

    Type of Commitment Declared Value
    Personal loans Monthly payment
    Short term loans Monthly payment
    Hire purchase Monthly payment
    Mortgage Monthly payment
    Credit card (including store cards, charge cards, mail order and budget accounts) Balance
    Overdraft Balance

    All current debt should be included and any agreed deferred payments.

    Any payments which will be repaid either as part of the transaction or prior to completion of the mortgage should be declared as such within the application e.g. the current mortgage payment on a remortgage application.

    Debt consolidation applications can be considered.

    By using the affordability calculator twice, firstly with all the debt included and then again with the debt to be repaid excluded, will give an indication of how close the requested loan amount is to being affordable both with and without the debt. If the loan amount is affordable with all debt included, we may automatically accept the application.

    Where affordability for the mortgage is contingent upon this debt being repaid we will typically assess the application by manual underwriting. However, depending on the level of debt being repaid we may automatically decline the application.

    Underwriter discretion is used with consideration given to LTV, affordability and level of debt repayment.

    Payments relating to second homes or buy-to-lets should be included, with any associated rental income captured as part of the application. Any shortfall or surplus in a commitment compared to rental income will be taken into consideration as appropriate within the affordability assessment.

  • Concessionary purchase/undervalue transactions (Mortgage details)

    We lend against the lower of purchase price or market valuation to a maximum of 90%.

    The property being purchased must be the applicant(s) main residence.

    There must be an existing relationship between the vendor and purchaser, with the following considered acceptable:

    • Parent/child or vice versa
    • Grandparent/grandchild or vice versa
    • Sibling(s)/sibling
    • Spouse/spouse
    • Sitting tenant and landlord (providing resident in property for minimum of 1 year)

    All transactions must provide vacant possession on completion. We do not accept where the vendor will continue to reside in the property.

    The property must not be a new build (see new build policy and incentivised sales).

    A full valuation will be required in all instances, including Scotland, and the application will be subject to the prevailing conveyancer due diligence and checks in accordance with the UK Finance Mortgage Lenders' handbook.

  • Contractor income - Short term, fixed term or temporary (employed applicants) (Income and expenditure)

    Applications from employed contractors on short term, fixed term or temporary contracts can be considered, subject to evidence of regular contracting income over the preceding 12 month period. To be keyed in the application with an employment status of ‘contractor’ and with gross annual income within the ‘latest year’ income field (previous year’s earnings are not required).

    Current contractual earnings only, which have been earned on a consistent basis over the period, will be used for affordability purposes.

    Applications where there is a high reliance on ‘temporary’ contractor income may be considered. Evidence of continuous contractual earnings over the last 12 months can be from copies of contract(s) or P60, along with the latest 3 months payslips and bank statements.

    Applicants who have an initial probationary period at the start of a ‘permanent’ contract are not included in the above and can be treated as permanent, with income verified as such.

    Where tax is managed by setting up a limited company or contracted on a self employed basis then treat as self employed. Please see our self employed section for further details.

  • Credit search and not scored (Applicant details)

    All applications are credit scored. A 'soft footprint' credit search will be completed at Decision in Principle (DIP). The search will be upgraded to a 'hard footprint', and therefore show on the credit file, only once an Offer in Principle (OIP) has been completed. Low scoring applications may be declined.

    The following provides examples of the types of application that fall into our credit scores:

    High Credit Score Low Credit Score
    Not over-indebted No existing mortgage
    An established clear credit history Little to no credit history
    Likely to have a lower LTV Likely to have a high LTV
    A well conducted existing mortgage Adverse credit history
    A record on the voters roll No record on the voter's roll
    Low credit utilisation Lots of new credit accounts opened
  • Debt consolidation (Mortgage details)

    See credit commitments and short term remaining debt.

  • Diplomatic immunity (Applicant details)

    We do not accept applications where either of the applicants benefit from diplomatic immunity e.g. embassy staff, high commissioners, employee of international organisations such as the UN.

  • Employment types (Income and expenditure)Job

    We accept the following employment types:

    • Employed – including contractors employed under an umbrella company contract.
    • Self Employed – the definition of self employed covers:
      • Sole traders
      • Partnerships (If applicant holds a 30% or greater shareholding then refer to the self employed section)
      • Company Directors (If applicant holds a 30% or greater shareholding then refer to the self employed section).
  • Ex local authority (Property details)RTB, Council

    Local authority blocks of flats or maisonettes must have a minimum 60% of units in owner occupation.

  • Expat mortgages (Mortgage details)

    We do not offer mortgages to expats.

  • Expenditure – Essential spend and basic quality of living (Income and expenditure)

    All regular expenditure must be declared.

    This should include non-credit commitments that the applicant would be unable or unwilling to give up without a detrimental impact to their family or lifestyle.

    The household is defined as the applicants applying for the mortgage and any people financially dependent upon them e.g. children, relatives, spouse of sole applicant.

    Where appropriate the household expenditure must relate to the new property for example new council tax costs.

    Any expenditure relating to the upkeep of other properties, such as a second home or buy-to-let, should also be included.

    Any other known future changes to expenditure should be declared.

    Type of Expenditure
    Food and Drink, Alcohol and Tobacco
    Transport
    Council Tax
    Utility and other household bills (TV)
    Household goods and services (furniture and appliances)
    Ground rent and service charges
    Education, childcare and maintenance
    Insurance pensions
    Other - include any regular other expenditure e.g. holidays, recreation, pets

    Spend not relating to the basic quality of life or considered essential should be excluded from the affordability assessment i.e. restaurants, as these costs could be reduced or cancelled with relative ease if the applicant were to get into payment difficulty. Unless the applicant deems these costs essential to their lifestyle.

  • Expenditure validation checks (Income and expenditure)

    In order to fully assess that the mortgage is affordable, the declared level of expenditure will be assessed through validation of bank statements and must be reasonable.

  • Financial associate credit score (Mortgage details)

    A financial association exists where a joint financial account is present, or has been present, or a joint application for credit has been made.

    Where a decision to lend is affected solely by financially associated data, we will not automatically decline without underwriter review and consideration of the circumstances.

  • First time buyers (Mortgage details)FTB

    We lend to first time buyers.

    Entering the customers complete address history will ensure the bureau will capture the customer's full credit history. Applications with a limited credit history may be referred for manual underwriting.

  • Flat/Annex (Property details)

    Properties with an annex are acceptable as long as they are used as part of the main accommodation such as a granny annexe, teenagers den, games room, etc. However, they are not acceptable if they are used for commercial purposes such as holiday lets or have separate service meters to the main house. Each case will be looked at on individual merit and be subject to assessment by the valuer.

    Any known occupants of the granny flat/annex must sign an occupier consent form. In certain circumstances we may insist upon the occupant seeking independent legal advice.

  • Flats - Maximum floors in block (Property details)

    There is no maximum number of floors, subject to valuation.

    • Flats up to and including the 4th storey are acceptable.
    • Flats over 4 storeys in both purpose built and converted blocks must be serviced by a lift.

    Please note that for counting the number of storeys, the ground floor is zero. Lower ground and basement floors are excluded from the count.

    Local authority flats or maisonettes must have a minimum 60% of units in owner occupation.

    Maximum Tesco Bank exposure on any block of flats is 20% of all units.

  • Flats or maisonettes of Large Panel Systems (LPS) (Property details)

    Large panel systems (LPS) can be considered for houses or maisonettes that are not more than two stories high, subject to a satisfactory report from a structural engineer. LPS is unacceptable for flats.

  • Flooding/flood plains (Property details)

    If a property has repeatedly been subject to flooding or if there is any restriction on the level of insurance cover available then it is unlikely that we will lend.

  • Floor area (Property details)

    We do not lend where the internal floor area of the property is less than 30 square metres.

  • Foreign address history/BFPO (Applicant details)Forces, Army

    Applicants must have a permanent UK address or be members of HM Forces holding a British Forces Post Office (BFPO) address.

    Applications can be considered from UK residents currently living outside of the UK if they can provide additional documentation such as employment contracts and they must also meet other policy requirements such as having UK bank accounts and residing in the property within the UK upon completion of the mortgage.

    We do not accept applications with foreign currency or overseas earnings where this income is required for assessing affordability.

  • Freehold flats and maisonettes (Property details)

    We do not lend on freehold flats unless the borrower owns the freehold of the whole building (subject to leases of any other flats in the building).

  • Geographic distribution (Property details)Regional

    Tesco Bank will only lend on properties within the following UK Geographic Areas:

    • England and Wales
    • Northern Ireland
    • Scotland including the following Islands:
      • Bute
      • Lewis and Harris
      • Mainland Orkney
      • Mainland Shetland
      • Skye
      • Arran
      • Mull
      • Islay

    Mortgage facilities will not be offered on properties situated in any area that is not subject to the jurisdiction of the Law of England and Wales, Scotland or Northern Ireland. Accordingly, properties located in the Isle of Man or the Channel Islands are not acceptable.

  • Granny flat (Property details)

    Each case will be looked at on individual merit and be subject to assessment by the surveyor.

    Any known occupants of the granny flat/annex must sign an occupier consent form. In certain circumstances we may insist upon the occupant seeking independent legal advice.

  • Guarantor/non-resident applicants (Mortgage details)

    We do not offer guarantor mortgages.

    An application is not acceptable where the financial support of a third party or a non-resident applicant is required.

  • Help to buy (Mortgage details)Indemnity, Guarantee

    We do not lend on help to buy.

  • Holiday lets (Property details)

    We do not lend where the property will be used as a holiday let.

  • HomeBuy direct (Mortgage details)

    We do not participate in the HomeBuy Direct scheme.

  • Home for dependent (Property details)

    The purchase of a property as a residence for a child or relative is unacceptable.

    All applicants named on the mortgage must occupy the property as their main residence.

  • Houses in Multiple Occupation (HMOs) (Property details)

    We do not lend on properties in multiple occupation (HMOs).

  • Impaired/ adverse credit (Mortgage details)

    Applications will be declined from prospective borrowers / existing customers who have any of the following:

    • Bankruptcy
    • Repossessions
    • Satisfied or unsatisfied CCJ
    • Satisfied or unsatisfied IVA
    • More than 1 satisfied or unsatisfied default in the last 36 months
    • More than 1 satisfied or unsatisfied default of more than £400
    • Current arrears or missed mortgage payments
    • Arrears or missed payments > 3 down in the last 6 months on other individual debts identified via the credit search

    Any applications with reduced adverse information may still refer to an underwriter.

  • Income deductions at source (Income and expenditure)

    Expenditure which is deducted at source by the employer should be declared on the application in accordance with the following guidelines:

    Source Deduction
    Student loans Yes
    Childcare vouchers Yes
    Maintenance payments Yes
    Car payments Yes
    Attachment of earnings orders Yes
    Season ticket loans Yes
    Other loans from employer Yes
    Personal pension contributions Yes, May Be Excluded* **
    Pension Additional Voluntary Contributions (AVCs) Yes, May Be Excluded* **
    Life cover May Be Excluded*
    Sharesave schemes May Be Excluded*
    Salary sacrifice to purchase additional annual leave May Be Excluded*
    Salary sacrifice to purchase vouchers e.g. retail, travel May Be Excluded*
    Salary sacrifice to purchase goods e.g. bicycle, computer May Be Excluded*
    Charitable donations / give as you earn May Be Excluded*
    Subscriptions (union, clubs) May Be Excluded*
    Private healthcare May Be Excluded*
    Mobile telephone costs May Be Excluded*

    * Where the applicant has confirmed the deduction is discretionary and would be reduced or cancelled in order to support the mortgage payment.

    ** In the case of pension contributions and AVCs, if the mortgage is Lending into Retirement (LIR) this payslip deduction should be included in the affordability assessment and we will not consider this acceptable for exclusion.

    Where an item has been declared as a deduction from salary, this should not be entered again as expenditure in the application.

  • Income from permanent health insurance (PHI) or income protection (IP) (Income and expenditure)

    We do not accept income sourced from health insurance/payment protection policies.

  • Income Types (Income and expenditure)Weighting

    All income should be keyed in full.

    We will require documentary evidence for the level of declared income necessary to support the mortgage. Please refer to the Income and ID guide PDF, 83kb for more details.

    Acceptable types of income are detailed below:

    Flexible Benefits taken as cash

    Flexible benefits that are additional to basic salary and taken as cash are acceptable providing this is a regular feature of pay and declared as an ‘Employers Allowance’.

    Primary income (100% used) Secondary income (60% used)
    Gross basic income Commission
    Second job Bonus (guaranteed)
    Self employed
    (drawings, dividends, net profit)
    Overtime (guaranteed)
    Pension Bonus (regular/annual)
    Contractor income Overtime (regular/fluctuating)
    Employers allowances
    (Shift allowance,
    Housing allowance from employer,
    Long term large town allowances,
    Car allowance, Flexible benefits (cash))
    Carers allowance

    Rental income

    Disability living allowance

    Statutory maternity pay

    Attendance allowance

    Foster carers allowance

    Child benefit

    Child tax credit

    Maintenance payments

    The following income types are considered unacceptable:

    • Foreign currency or overseas earnings
    • Investment income e.g. share dividends
    • Trust income
    • 3rd Party income (spouse, partner, parent etc., excluding maintenance income)
    • Bursaries from employers
    • Income support
    • Incapacity benefit
    • Job seekers allowance
    • Universal credit (where not listed above)
  • Income validity (Income and expenditure)

    Income verification is deemed to have expired after 6 months. When a mortgage offer is issued and/or extended, income checks must be dated within this period or updated income documentation sought.

  • Interest only (Mortgage details)Endowment

    We do not offer interest only mortgages.

  • Interest only repayment vehicles (Mortgage details)

    We do not offer interest only loans.

  • Intermediaries own (or close relatives) application  (Mortgage details)Conflict of interest

    Intermediaries must make us aware of any applications placed where they have a close relationship with the borrower(s) e.g. their immediate family, ex-spouse etc.

    Where the application is their own mortgage, this must be placed through the direct channel.

  • Islamic mortgages (Mortgage details)

    We do not offer Islamic Mortgages.

  • Japanese knotweed (Property details)

    Assessed by the surveyor on a case by case basis. Properties previously treated are acceptable provided evidence of the work being carried out by a contractor either registered with the Property Care Association (PCA) or of a similar level of expertise and experience.

  • Job offer/Not yet started (Income and expenditure)

    Positive future changes can be considered but must be factual, credible and capable of substantiation e.g. an applicant with a new contract of employment with a formal written offer of employment from the employer.

  • Laing Easiform built after 1945 (Property details)

    Laing Easiform (a concrete system with horizontally placed reinforcement) if built after 1945 is acceptable.

  • Leasehold/tenure (Property details)

    Freehold, absolute ownership (Scotland) and leasehold tenures on residential property suitable for owner occupation are accepted.

    Freehold flats are not allowed unless the applicant owns the freehold of the whole building (subject to leases of any other flats in the building).

    For leasehold properties the lease must have at least 30 years left to run at the end of the required mortgage repayment term (subject to minimum unexpired term of 55 years).

    Where the property is a New Build, the minimum leasehold term is 125 years for flats and 250 years for houses.

  • Lending into retirement (LIR) (Applicant details)Pension

    We will consider an application where one or both borrowers are lending into retirement and their income is required to demonstrate affordability.

    The maximum retirement age permitted is 70 years.

    The lending into retirement assessment will be based on the lower of applicant stated retirement age and 70 years.

    Any request for a mortgage term that would result in an individual lending into retirement will be managed by one of the following approaches:

    i. Retirement is 10 years or more away AND the term of the loan requested will extend past retirement by up to 5 years, then verification that the applicant has a pension provision in place will be requested. This can be validated from a payslip showing employee pension contributions, a pension statement or evidence of non-contributory pensions.

    ii. Retirement is less than 10 years away OR the term of the loan requested will extend past retirement by over 5 years, then the applicant’s ability to maintain mortgage repayments in retirement will be referred for manual underwriting assessment. The underwriter will request evidence of anticipated earnings in retirement and consider whether there is affordability for the mortgage over the whole term.

    We may request further details or evidence to support any information provided on the application with regards to the plausibility of an applicant’s retirement age.

    Already in retirement:

    • Only pension income that the applicant is already in receipt of at the time of the application, and that can be evidenced, should be used in the ‘pension income’ section of the application.
  • Let-to-buy (onward residential) (Mortgage details)

    We do not offer mortgages where the intention is to let our property.

    House purchase applications where an existing mortgage with another provider will continue following completion of the Tesco Bank mortgage can be considered, subject to affordability.

    Where the mortgage is already with Tesco Bank this would not be acceptable, as we will only consider a maximum of one mortgage per applicant.

    The continuing debt should be keyed as an ongoing financial commitment.

  • Limited company director (Income and expenditure)Shareholding

    Where a director’s shareholding is less than or equal to 30% we normally assess as employed. There may be occasions where it is acceptable to use earnings outside the salary e.g. share of profits, dividends.

    However to do so, the application must be keyed and verified on a self employed basis to assess variability in earnings, typically declared over the last 3 years trading, but verified over a 2 year period.

  • Loan-to-income (LTI) caps (Income and expenditure)

    Our maximum lending amount is based on an affordability assessment which considers the applicant(s) income, credit commitments and outgoings.

    The maximum loan we will offer, where there is affordability to do so, is 4.5 times gross annual household income.

  • Lodger income (Income and expenditure)Tenants

    We do not accept rental income from lodgers.

  • Maternity/Paternity leave (Income and expenditure)

    The applicant(s) must demonstrate they have the means of repaying the mortgage during and / or after any known change to their circumstances.

    Where an applicant will experience a reduction to income as a result of maternity/paternity leave this must be declared.

    Where an applicant is already on maternity/paternity leave with a reduced level of income i.e. statutory maternity pay (SMP), then we can consider this for affordability purposes and input as maternity allowance.

    Where an applicant is due to return to work following a period of maternity/paternity leave, then we can consider their prospective future earnings, providing this will be within the next 3 months. Evidence of the terms under which the applicant will return to work will be required including salary, position and hours. If the above return to work criteria cannot be met then affordability must be assessed against the expected future (lower) level of income.

    Where an applicant can however evidence a level of savings to cover any income gap over the period of maternity/paternity leave then this can be considered.

    When an applicant is on or due to go on maternity/paternity leave the cost of any new dependent must be included within the affordability calculation.

  • Maximum applicants (Mortgage details)

    Maximum of 2 applicants.

  • Maximum loan by LTV (Mortgage details)

    The following table denotes the maximum loan amounts per LTV:

    Amount of lending Max LTV
    Up to £300,000 95%
    Up to £500,000 90%
    Up to £750,000 80%
    Up to £1,000,000 75%
  • Maximum loan by LTV for new build (Mortgage details)

    New build properties are defined as one of the following

    1. New build
    2. Newly converted or
    3. Previously unoccupied properties built within the last 2 years.

    The maximum LTV permitted on new build properties is:

    Property Type Max LTV
    New build flat 75%
    New build house 85%
  • Maximum number of units in building (Property details)Exposure

    The maximum exposure on blocks of flats is 20% of all units.

  • Minimum and maximum age (Applicant details)

    Minimum Age is 18 years at the time of the application.

    Maximum Age is 75 years at term end.

  • Minimum income (Income and expenditure)

    The minimum accepted household gross per annum income is £20,000. Income will be verified using appropriate and independent sources.

  • Minimum loan/maximum loan (Mortgage details)

    The minimum loan is £40,000 and the maximum loan is £1,000,000.

  • Minimum term/maximum term (Mortgage details)

    The minimum term is 3 years and the maximum term is 40 years.

  • Mining/radon gas area (Property details)

    Properties in an area affected by mining activities or radon gas can be considered subject to the surveyors comments on marketability.

    A specialist report may be required.

  • Min term of employment/self employed (Income and expenditure)

    For employed applicants there is no minimum time with employer however we will require verification of 3 months earnings from a bank statement.

    For self employed applicants where less than 3 years income can be evidenced this will be referred to an underwriter for consideration.

  • Mobile homes/houseboats (Property details)

    We do not lend on mobile homes or houseboats.

  • Nationality - Right to Reside/non EEA Nationals (Applicant details)EU, Foreign

    Applications from EEA nationals are acceptable, subject to standard checks.

    If the applicant is a national of a non EEA country, a work/residency permit will always be requested.

    The applicant’s permanent right to reside in the UK must be confirmed. Acceptable documents from non EEA applicants to confirm this are:

    • A letter from the Home Office confirming the applicant’s right to remain in the UK.
    • Indefinite/right of abode UK residency stamp in the applicant’s passport. The residency permit is acceptable on an expired passport.
    • An Identity Card for Foreign Nationals (ICFN) also known as a biometric residence permit (BRP), showing indefinite rights to remain.

    Evidence of a right of permanent residence in the UK is acceptable for non EEA nationals.

    If a non EEA national has a specified time limitation over their residency, for example leave to enter/remain until date, we are unable to lend.

    Without original proof of right to residency or where the permission to stay has expired, the application will be declined.

    The employment status must be confirmed as secure and the applicant must have been resident in the UK for at least 3 years.

    ‘Indefinite leave to remain’ and ‘indefinite leave to enter’ are acceptable terminology on resident documents.

  • New build/newly converted/self-build (Property details)

    New Build is defined as properties which are new, newly converted* or previously unoccupied built within the last 2 years.

    The maximum LTV on new build properties is restricted as follows:

    Property Type Max LTV
    New build flat 75%
    New build house 85%

    The maximum exposure on any development is 20% of all units.

    Incentives from the builder are acceptable provided the valuer has receipt of the UK Finance disclosure of incentives form, to a maximum of 5% of the property value as standard. Where financial incentives are > 5% of the property value, the property will be considered on a case by case basis.

    Requirement for the acting surveyor to confirm the property has been satisfactorily completed and that an acceptable new build warranty is in place.

    Re-inspections are not required as standard. If the property has not reached a suitable stage in its build a re-inspection may be undertaken prior to completion, if recommended by the valuer (for example, if there are < 5 properties in a development).

    Leasehold New Build Properties must have a minimum leasehold of 125 years for flats and 250 years for houses.

    Where New Build properties are subject to Ground Rents, these must increase at an acceptable level (i.e. in line with Retail Price Index, or doubling no more frequently than every 25 years).

    *Newly converted can include, but is not limited to:

    • Conversion of existing non-residential property, e.g. an existing mill converted into flats.
    • Refurbished property e.g. an existing residential property divided into smaller units, or the reverse.

    We do not lend on self-build projects.

    A dedicated telephone service is available for New Build enquiries. Contact us on 0345 051 8465*.

    Lines are open Monday to Friday 8am-6pm.

    *This number may be included as part of any inclusive call minutes provided by your phone operator.

  • No mains, electricity, water supply or drainage (Property details)

    Typically, we will not provide mortgage funding over properties that lack basic services.

    Properties in rural areas may have some form of alternative drainage system e.g. in the form of a septic tank, and the surveyor will comment on the adequacy of the relevant drainage system.

  • Non-habitable/habitable requirements (Property details)

    Properties that are not habitable are not acceptable.

  • Offer extension (Mortgage details)

    Mortgage offers are valid for 180 days from date of issue.

    An extension to the formal offer can be considered, subject to the following:

    • Where requested, income documentation is updated and resubmitted.
    • Where requested, an updated property valuation is completed.
    • Where required, a new credit search and affordability assessment will be completed.

    Typically supporting documentation and the credit search will be acceptable for up to 6 months.

    We must be notified of any change in circumstances.

  • Offer validity period (Mortgage details)Mortgage offer

    The Decision in Principle (DIP) and Offer in Principle (OIP) are each valid for 90 days. The formal offer is valid for 180 days.

  • Offset (Mortgage details)

    We do not offer offset mortgages.

  • One year's accounts (Income and expenditure)

    We can consider applicants with less than 3 year’s accounts at an underwriter’s discretion.

    Typically, to be acceptable in this circumstance we will require a track record of earnings at a similar level in the applicant’s profession. For example, a dentist with only two years self employed trading but a history of employed earnings.

  • Online (Internet) printed documentation (Documentation)

    Online payslips are acceptable providing they are:

    • In PDF format that is physically printed from their employer’s website.
    • Name and employers name must be detailed.
    • Pay date and method of payment detailed.

    Online bank statements are acceptable providing they are:

    • In PDF format that is physically printed from the bank’s website.
    • The applicant(s) name and account number are clearly shown.
    • The statement date is displayed.
  • Overall construction (Property details)

    Properties must be of standard construction, be in a good state of repair and be readily mortgageable. Tesco Bank will be guided by the appointed surveyor in determining the suitability of the property for mortgage purposes.

  • Partnerships (Income and expenditure)LLP

    For income verification of partnerships, it is necessary to identify the mortgage applicant’s pre-tax earnings for the last 3 years. This could be either their net profit before tax, individual drawings from the business or individual share of profits. These will typically be verified over the last 2 years.

  • Period timber (Property details)

    Period timber framed properties are acceptable providing they are readily marketable and mortgageable.

  • Precast reinforced concrete (Property details)

    Precast reinforced concrete (PRC), where the property has been repaired under the PRC (Homes) Ltd repair scheme, is acceptable.

  • Probationary period (Applicant details)

    Applicants who are on a permanent contract of employment, however are still subject to a probationary period with the employer, can be considered based on standard income verification checks (payslip(s) and bank statements).

  • Purpose of mortgage (Mortgage details)

    We will only lend for the purposes of purchasing or remortgaging of the applicant(s) main residence.

  • Remortgage recently purchased property (Mortgage details)

    Remortgage applicants must have owned the property for at least six months.

    If less than this period we can consider an application subject to underwriting approval and an acceptable reason for the request to remortgage so soon after initial purchase.

  • Repayment type (Mortgage details)

    We only lend on a Capital and Interest repayment basis.

  • Residency (Applicant details)

    The applicant must have been resident in the UK for at least 3 years or the application will be referred.

    We will consider applications from members of the British Armed Forces where residency history may include overseas addresses.

  • Retentions (Property details)

    We do not accept retentions.

  • Re-types (Scottish cases) (Property details)

    We will accept a transcript of a Scottish Home Report mortgage valuation subject to this being no more than 3 months old and the relevant surveyor being a member of the Tesco Bank panel. If these criteria cannot be satisfied then a new valuation will be required.

  • Right to buy (Mortgage details)RTB, Council

    We do not lend on right to buy properties.

  • Second charge (Mortgage details)

    Second charges are not acceptable.

  • Second home/holiday home (Property details)

    We do not lend on second homes or holiday homes.

  • Second job (Income and expenditure)

    100% of basic contractual income from a second job is acceptable.

  • Self build (Property details)

    We will not lend on self build properties.

  • Self-employed (Income and expenditure)

    Self employed earnings will be declared over a 3 year period, although typically evidenced over a 2 year period.

    This can be declared and verified from either the business year end of the company or tax year end.

    We can accept:

    • An Accountant’s Report covering the last 2 years. Please see the Tesco Bank accountant’s report template PDF, 60kb.
    • HMRC SA302’s for the last 2 years accompanied with HMRC tax year overview statements for the last 3 years
    • Online downloaded documents from HMRC are acceptable.
    • Full Accounts covering the last 2 years.
  • Shared equity (Mortgage details)

    We do not lend on shared equity schemes where the borrower(s) will not have exclusive ownership of the property.

  • Shared ownership (Mortgage details)

    We do not lend on shared ownership schemes.

  • Shift allowance (Income and expenditure)

    This is acceptable providing it is a permanent feature of pay.

    Where it is required to support the mortgage we will request the latest 3 months’ salary slips showing evidence of the allowance.

  • Solar panels (Property details)

    If the property has solar panels, this can be considered subject to surveyors comments. Where a property is subject to a registered lease of roof space for solar panels acceptability will be dependent on marketability/value of the property and whether the panels can be removed.

  • Source of deposit (Mortgage details)

    Evidence of source of deposit may be requested. The following sources are generally acceptable:

    • Savings
    • Inheritance
    • Equity from sale of current property
    • Equity raised from another property that is owned - acceptable providing the commitment is included.
    • Family gifted deposit (non repayable) - we may request confirmation that the gift will not be repaid.
    • Family sourced deposit (repayable) - the level of monthly repayment should be included as a commitment in the application for affordability purposes. If repayment is with the sale of property enter monthly amount as £0.
    • Builders Incentives - see new build section.

    The following sources of deposit are not acceptable:

    • Vendor gifted deposit or cashback (not house builder)
    • Personal loans or credit cards

    We do not accept a deposit where the person providing it will be living in the property, but is not named on the mortgage, or where the person has any rights or interest over the property.

  • Steel framed property (Property details)

    Steel framed houses are acceptable if readily marketable and mortgageable.

  • Studio flats (Property details)

    Studio flats are acceptable for lending purposes providing all other aspects of our criteria are met. See minimum floor area.

  • Supply teacher (Income and expenditure)

    See ‘Contractor’ income for further details.

    Generally, where a supply teacher can evidence continuous employment over the last 12 months, then earnings can be taken into consideration.

    To be keyed in the application with an employment status of ‘contractor’. Provide gross annual income within the ‘latest year’ income field (previous year’s earnings are not required).

    We would require evidence of regular local authority contracting income over the preceding 12 month period from either a copy of the contract(s) or P60.

  • Thin file applicants (Income and expenditure)

    Entering the customers complete address history will ensure the bureau will capture the customer's full credit history. Applications with a limited credit history may be referred for manual underwriting.

  • Tied accommodation (e.g. vicar, teacher) (Property details)

    Applicants who reside in tied accommodation e.g. teacher, vicar etc. but wish to buy a house with the intention to reside there in the future are not acceptable.

    However, if the applicant is planning on leaving the tied accommodation to live in the property immediately, then this is acceptable and should be treated in the same manner as a standard residential house purchase.

  • Timber framed property (Property details)

    We do not accept timber framed dwellings built prior to 1970. Properties built after 1970 but without brick/rendered block external facings are considered on their individual merits.

    Period timber framed properties are acceptable, subject to surveyors comments, providing the property is readily marketable and mortgageable.

  • Timber or steel frame where walls have been insulated after original construction (Property details)

    We do not accept timber or steel framed properties where the walls have been insulated after the original construction.

  • Trust income (Income and expenditure)

    We do not accept trust income.

  • Two kitchens (Property details)

    Each case will be looked at on individual merits and be subject to assessment by the valuer.

  • UK bank account (Applicant details)

    All payments must be made by direct debit from the applicants own UK bank account.

  • Umbrella companies (Income and expenditure)

    Applicants who are contractors employed under an umbrella company contract are acceptable.

  • Unconventional construction - Thatched roofs, metal roofs, etc (Property details)

    We may consider unconventional constructions, however we will be guided by the surveyor as to the suitability of the property for mortgage purposes, and that it is readily marketable and mortgageable.

  • Unencumbered property (Property details)Mortgage free

    We will lend on an unencumbered property where the applicant is seeking to raise finance against the security of the property to meet the cost of home improvements or for other acceptable purposes e.g. funding the purchase of second/holiday homes (excluding self build projects within the boundaries of the property we hold as security), buy-to-let in the UK or abroad, or the purchase of an investment property.

  • Valuation issues - Structural problems, subsidence, specialist report required, etc. (Property details)

    Further specialist reports may be required dependant on the advice provided by our valuer.

    If the applicant wishes to progress the mortgage application, they should instruct a suitably qualified specialist and are liable for the costs. The report will be sent to the valuer to review and provide further comment on the suitability of the security for our mortgage purposes.

  • Warranties/Professional Consultants Certificate (PCC) (Property details)

    Ten year warranty cover under one of the following schemes is required if the property is new build / newly converted within the last two years.

    • NHBC.
    • Building Life Plans.
    • Build Zone.
    • Castle 10 New Home – provided by Checkmate.
    • LABC New home warranty.
    • Premier Guarantee.
    • Zurich Municipal provided there is already a warranty in place.
    • CRL Management Ltd. (CRL)
    • The Q Policy for Residential Properties
    • The Q Policy for Bespoke Properties (detached only)

    Architect/Surveyor Certificates are also acceptable provided the UK Finance Professional Consultants Certificate is completed, the consultant holds one or more of the acceptable qualifications listed within the UK Finance Mortgage Lender’s handbook, and there is adequate Professional Indemnity Insurance (PII) cover in place.

  • Wimpey No-fines (Property details)

    Wimpey No-fines (a concrete construction without fine aggregate in the concrete mix) is acceptable.

  • Zero hour contracts (Income and expenditure)

    See ‘Contractor’ income.

    Generally, where employed on a zero hour contract, providing we can evidence continuous employment over the last 12 months, then the average earnings over this period can be taken into consideration.

    To be keyed in the application with an employment status of ‘contractor’. Provide gross annual income within the ‘latest year’ income field (previous year’s earnings are not required).

    Applications where there is a high reliance on temporary contractor income will be considered via manual underwriting.

    We would require evidence of regular contracting income over the preceding 12 month period from either a copy of the contract(s) or P60.

    We do not accept applications from people employed on a casual basis.