Paragon Mortgage lending criteria

Paragon Banking Group PLC 51 Homer Road, Solihull

West Midlands B91 3QJ

Web: www.paragonbank.co.uk

Advances

Up to £4,000,000 65% LTV 

Up to £1,500,000 70% LTV 

Up to £1,000,000 75% LTV 

Up to £750,000 80% LTV 

The Max loan to value (LTV) is 80% This should INCLUDE any lender fees

Notes

Illustration Type = ESIS. Mortgage NOT portable
You must repay the full balance outstanding on the loan together with any early repayment charges and fees
– Mortgage is NOT for First time buyers
We will not consider applications where the applicant is purchasing from an associated limited company or connected party.

Product is subject to availability of funds and withdrawal at any time.

At least one applicant must be employed or self-employed as defined below. Employed applicant(s):
Applicant(s) must be in permanent non-probationary employment. Applicant(s) on long term contract work will be considered on an individual basis.

Self employed

Applicant(s) who work on a subcontract basis will be treated as self employed.
An applicant will be classed as self employed where the individual owns 20% or more shareholding of the company or is employed by a family business.
Applicant(s) must have been trading in their present business for a minimum of 2 years.

Where the identity of all applicants cannot be established through the underwriting process, proof of identity verified by the solicitor or mortgage broker will be required. For Accepted accountancy institutes please refer to Lender.

The Lender reserve the right to request additional information or references such as an accountant’s reference, employment reference, mortgage statements or a bank reference. Such information may be renewed if completion does not take place within 6 months of them being obtained.

Paragon BTL Non Portfolio is designed for landlords who own up to three mortgaged buy-to-let properties. Applications for landlords with more than three mortgaged buy – to let properties , limited companies, limited liability partnerships, HMOs and multi-unit blocks can be made to Paragon BTL Portfolio.

Please see www.paragon-mortgages.co.uk for more details. Free Valuation
Any overpayment made during the Early Repayment Charge period will be subject to a charge. Refer to our Customer Service department regarding overpayments made after the Early Repayment Charge period.

Buy to Let : Accepted, Max properties 3 Capital Rest Period : Quarterly

Repayment Types
Repayment Yes

Endowment PEP Yes
Pension
Interest only (no RV) 

With Profits Yes 
Unit Linked ISA
Split Repayment Yes

Fees

Arrangement : Booking : Varies Can be Added None
Early Repayment Charges
Varies
Higher Lending
None

Valuation Basic: Free

Min Valuation £75000
At completion we require a valuation report no older than 3 months. If a re-valuation is required this will be at the applicants expense.

Application Fee – £299.00 Payable upfront. A non-refundable application fee payable up front on all submissions Funds Transfer Fee – £25.00 Payable on completion.
Insurance Admin – £25.00 Payable on completion. Deeds Release Fee – £90.00 Payable on redemption. Sealing Fee – £150.00 Payable on redemption.

Acceptable Property Types

Freehold Flat No
Purpose Built Flat Yes
Converted Flat Yes
Flat Over Shop Refer
Maisonette Refer
Studio Flat Refer
Flying Freehold No
Thatched Consider
Timber Framed No
Concrete No
Agricultural Tie No
Flat Over 4 Storeys Refer
Listed Building Refer

Right to Buy
Not Accepted

New Build acceptable. We will take a first legal charge and will only consider single self contained properties in England, Wales and Scotland.
Houses in Multiple Occupation and multi-unit blocks are not acceptable. Let property
Property may either be let:
– on an assured shorthold tenancy subject to a minimum term of 6 months and a maximum of 12 months or
– to a limited company registered in England, Wales or Scotland for up to 3 years or to a local authority or housing association for up to 5 years provided it is subsequently occupied by a private individual or individuals whose rights of occupation do not extend beyond the term granted to the acceptable tenant, (in both cases being pre-approved by us and being on appropriate terms).

Property shall not in whole or in part be let to or occupied by:
– the applicant, or any member of their family
– the guarantor, or any member of their family
– the vendor of the property, or any member of their family
– any previous owner of the property, or any member of their family
– an employee of the applicant
– an associated subsidiary, or parent company of the applicant Sale-and-rent-back arrangements are not acceptable.
Holiday lets are not acceptable.
Where a tenancy agreement pre-dates the completion of the loan then the solicitor acting must ensure that our interests are fully protected.

Property exclusions

Property is unacceptable if it is:
– a freehold flat or maisonette in England and Wales
– designated as defective under any housing legislation
– subject to agricultural or other planning restrictions
– subject to notice of mineral extraction, contaminated land or previous mining subsidence and landfill
– ex-local authority flats and maisonettes
– being purchased under the right to buy scheme
– built within the last 10 years without an NHBC certificate or other guarantee acceptable to us
– non-traditional construction such as concrete or timber or where existing or possible structural defects are apparent
– a shared ownership property
– located within either 10 metres of an electrical sub-station or 100 metres of an overhead high voltage cable or communication mast.
– a flat in a block over 4 storeys high (except within Greater London)
– a studio flat, under 30 square metres
– a new or recently built flat where there is, or is likely to be, a low demand from tenants
– a property which is attached to, or is, part commercial
– a property with an element of – flying freehold
– a self-build property
– a property with restrictions relating to sale or occupancy e.g. section 106 notice
– a property subject to chancel repairs/liability
– a property subject to issues identified by an environmental search
– a converted flat where the applicant occupies a property in the same building.

Occupation
Depending on the specific conditions of each loan, the property must either be occupied by acceptable tenants, or may be vacant between lettings for up to 90 days, subject to the terms of the insurance cover being complied with.

Ex local Authority houses can be considered by exception (ex-local authority flats/maisonettes are not acceptable) Accepted Locations : England, Scotland, Wales

Requirements

Bank Statements No
At Least 3 Months Pay Slips Yes
P60 Yes
Proof Of Residency No
Life Policy To Be Assigned No
Previous Lender References No

Insurance
Buildings Conditional

Conditions On Loan
Min Loan £30,000/Rmg £30,000
Max Loan £1,000,000/Rmg £1,000,000
Max Portfolio of BTL Loans £1,000,000
Min Age 21 years
Max Age 85 years
Min Term 5 years
Max Term 25 years
New build is accepted subject to terms and conditions please refer to Lender before submitting an application.

Applications will be considered for a maximum of two individuals who should all have been resident and liable to tax in the UK for a minimum of the last 2 years.

All applicant(s) must have indefinite leave to remain in the UK. At least one applicant must be the owner of a residential property or residential investment property.

The applicant(s) should not be over 80 years of age at the end of the mortgage term.

Where the identity of all applicants cannot be established through the underwriting process, proof of identity verified by the solicitor or mortgage broker will be required.

Applications will not be accepted where the property is being purchased or refinanced through, or where the applicant is in anyway connected to, a property investment club or syndicate.

Proof of the source of the deposit may be requested. Where the applicant(s) are not providing the whole of the balance of the purchase price from their own funds, full details must be provided on the application form for consideration by us.

It should be noted that property sales between corporate entities that are part of the same group or have common directors, are not normally acceptable.

A total mortgage exposure per borrower of £1,000,000 may be advanced to an applicant on a property portfolio. Interest Only For life of loan ( discretion to switch to capital & repayment subject to 28 days notice)

The property must be adequately insured under an acceptable buildings insurance policy in accordance with the Paragon Mortgages 2010 Ltd Mortgage Conditions.
You are not required to buy any insurance through Paragon Mortgages 2010 Ltd, but a single fee of £25 will be charged for reviewing your buildings insurance policy.
Foreign Citizens Accepted Ex-Patriates Not Accepted

Income 

Min months in current position none
Min months in continuous service none
Min no. of years accounts 2
Average years taken to calculate income 2
Will consider declining profit Refer

A minimum income of £25,000 (single or combined) is compulsory.

Applicant(s) income can include:
– gross employment income.
– taxable self employed income.
Income from renting property cannot be included.

In respect of self-employed income:
Last 2 years accounts prepared by a qualified member of an accountancy body acceptable to Paragon or last 2 years self-assessment tax returns plus HM Revenue and Customs (HMRC) approval form SA302 or SA300 (if HMRC calculated) or SA310 (if self-calculated).

Applicants may be subject to validation of the income requirements detailed above. Intermediaries should obtain and hold on file proof of income in all cases.

Applicant(s) must be in permanent non-probationary employment. Minimum months in current employment please refer to Lender. Minimum months in continuous employment please refer to Lender.

Minimum Income – Single £25000
Minimum Income – Joint £25000
Hire Purchase Taken into account

Personal Loans Overdraft Taken into account Taken into account
Credit/Store Cards Child Maintenance Child Education Taken into account Taken into account
NOT Taken into account
Extra Income:-
Other Income – Guaranteed
Add 50% to income before multiply
Other Income – Regular Other Income – Irregular Add 50% to income before multiply No
Investment Income Mortgage Subsidy Large Town Allowance Maintenance Payments No No No No
Non-Contributory Pension Car Allowance No No

Paragon Calculator

The first thing to decide is are you classed as a Portfolio or non-Portfolio client

Non Portfolio

If you have up to 3 buy to let properties (including the one to be mortgaged) then you are classed as non-Portfolio 

Try this Non Portfolio Paragon calculator

Portfolio Landlord

If you have 4 or more buy to let properties (including the one to be mortgaged) then you are classed as a Portfolio landlord

Try this Portfolio landlord calculator

Remortgage 

Capital Raising 70%
Home Improvements 70%
Debt Consolidation Not accepted
School Fees Not accepted
Holidays/Cars Not accepted
Buy Other Property 70%
Business Purposes Not accepted
Divorce Settlement Not accepted
Unencumbered 70%
Where the applicant(s) has been the registered owner(s) of the property for less than 6 months, the loan amount will be based upon the lower of the purchase price or current valuation. Exceptions will be considered where it can be demonstrated, that since the date of purchase, significant improvement works which have enhanced the property value have been carried out. In all instances, the property must be registered at the Land Registry as owned by the applicant(s), at the date of application.

Acceptable capital raising purposes for remortgages are all purposes concerned with owning and renting of residential property.

Adverse Credit
CCJs/Defaults : Not accepted.
Arrears : Not accepted.
Bankruptcy/IVAs : Accept:
1) IVA must be discharged at least 6 years prior to application. This does not incur any rate loading.
2) Bankruptcy must be discharged at least 6 years prior to application. This does not incur any rate loading.