Assessment of Additional Residential Mortgages: Monthly Payment or Outstanding Balance

Our standard acceptability

Monthly Payment

Criteria definition:

Indicates if we will use the monthly payment of any background other residential mortgages when assessing affordability or the outstanding balance. For example, Applicant 'A' is applying for a new mortgage with Lender 'A'. Applicant 'A' has a second property in the background that is used as a second home with an outstanding mortgage of £50,000 and a monthly payment of £300 per month. When assessing Applicant 'A's' income Lender 'A' take the monthly payment of the background mortgage as a monthly commitment as opposed to deducting the outstanding balance (£50,000) from the total amount they have calculated Applicant 'A' could borrow based on his income.

Policy Notes:

Family Building Society will use the monthly payment of any additional residential mortgages when assessing affordability as opposed the outstanding balance.

Warning Notes:

The Society takes the monthly payment but stresses the payment at a notional rate of 6.25% (calculated on an interest only basis).

• affordability assessment
• Policy

Last updated:

25 March 2020