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Scottish Widows use affordability as a way of assessing how much they will lend. Please refer to our affordability calculator.
PLEASE NOTE: This calculator will give you a broad indication of the amount we are able to lend. It's designed for guidance purposes only.
For all applicants we must ensure that your clients can afford the monthly payments and the application will be assessed on this basis. The table below details the loan to income multiples we’ll typically consider.
The actual loan amounts are subject to our usual underwriting requirements and an accurate estimation of credit score.
For the Affordability Model to accurately reflect an applicant's ability to support a loan, it is essential that all information collected accurately reflects committed expenditure. The Affordability Model will automatically take into consideration a number of commitments that all our customers will have to pay. These are the following:
As these items are already considered, they therefore do not need to be keyed as commitments.
CommitmentsRegular essential committed expenditure which is in addition to the amounts taken into consideration by the affordability model listed above. The types of expenditure will be specific to the individual applicant, for example payments for a holiday home or timeshare, maintenance payments, club membership, expensive hobbies/leisure activities or pay school/university fees for grandchildren.
When collecting details of the applicant’s commitments, please include details of all of the following:
The commitments are captured at an application level rather than at an individual applicant level.
It is not unusual for someone to forget a credit commitment or not appreciate that a commitment is relevant. For example, common omissions include: Buy Now Pay Later finance agreements, car loan repayments and any commitments an applicant is acting as guarantor for.
The system will perform a ‘reasonability check’ of declared commitments against the credit details supplied by Experian. If Experian indicates a higher commitment figure, this will be used in the calculations.
Affordability must also include future changes to income and expenditure - if there are any other planned future credit commitments that the applicant(s) will be taking, these need to be detailed.
Costs which are not essential and could be cancelled should not be keyed as commitments.
Where a customer fails on affordability there are options to extend the term (up to retirement), extend term into retirement (subject to evidence of adequate retirement income) and on occasions, a further review to confirm we feel it is appropriate for the customer to lend into retirement. Where the application is not affordable it will be declined.
Applications which involve assignable contracts or irrevocable powers of attorney in favour of intervening sellers are not acceptable. Any other structure to the transaction which has a similar effect should be reported to us. Assignable contracts allow the original buyer to sell the property before legal completion, by assigning the contract to buy the property to a new buyer after contracts have been exchanged with the developer.
The Bankruptcy question should be answered as yes if your customer has had a bankruptcy/IVA/Debt Management Arrangement or Debt Relief Order within the last 6 years or still have an outstanding Bankruptcy Restriction Order.
CCJs are generally taken into account in credit scoring however background details are required.
All applications will be credit scored. If we turn down an application, customers have a right to appeal. Whilst we’ll always reconsider carefully, without new information it is very unlikely that we will be able to change our decision.
All customers must make a minimum personal deposit for the property relevant to their individual credit score, product or scheme. No element of this deposit should be represented by a personal loan.
Where evidence of deposit is requested, the following documents are acceptable:
Gift from family
You should obtain a letter written by the family member that meets all of the following requirements:
You should also provide a UK bank statement or UK passbook from the family member or applicants, showing the deposit funds in their account. Alternatively, the family member or applicant may provide a letter from their UK bank confirming that the funds are available. Additional statements may be requested where required.
If any of the deposit is gifted, this should be chosen as the source of deposit when keying the application.
The definition of a family member is someone who is related to at least one of the applicants:
Gifts from friends or employers, developers/landlords, cousins, or foster/guardian children are not acceptable.
You should obtain:
Vendor Deposits and Cashbacks (Non New Build Properties) - Vendor Gifted Deposits are an unacceptable source of deposit for any non new build property.
This does not impact buyers who are receiving gifted deposits to purchase New Build Properties or concessionary purchases.
We do not currently accept new business applications from ExPat residents.
All loans arranged where the capital element is not included in the monthly payment, including those that are part capital and interest repayment, part interest only, must have a plan in place to repay the capital at the end of the term. This includes new loans, further advances and product transfers.
As a responsible lender, it is important for us to see evidence of the repayment plan for interest only mortgages so documents relating to the repayment plan must be received before a new mortgage offer can be considered.
You can see a list of our current acceptable repayment plans on the interest only criteria page.
Maximum LTV: 90%
85% for remortgage with capital raise
The following restrictions apply for borrowing above £750,000:
New build properties - 85%
Up to 75% LTV can be interest only or repayment
Over 75% and up to 90% LTV the full balance must be on a repayment basis
Further Advances are available up to 85% LTV (75% for interest only), based on the current value of the property. Existing customers will not be considered for a Further Advance until 6 months have elapsed since completion of the original mortgage.
Minimum term: 5 years
Maximum term: 40 years, or to age 80 if less.
If the mortgage term extends beyond the lower of either a maximum working age of 70 or anticipated retirement age, we will assess affordability on both current sustainable income and expected retirement income.
The maximum age at the end of the mortgage term is 80 years for all lending
Applications where previous mortgages have been in arrears will be considered on an individual basis.
Where a customer wishes to raise monies on a property they own outright, properties must be registered with the land registry in the owner's name(s) for at least six months before any further lending will be considered. The only exception to this rule is an inherited property where the applicant is a beneficiary.
Loans on mortgage free properties must be keyed as ’Remortgages’ and the broker should answer ‘No’ to the following question at the Mortgage Details section “Do you currently have a mortgage on the property on which you are applying for loan on?”. The remortgage package is not available if there's not currently a mortgage on the property.
The maximum loan available is 90% LTV.
How to keyTo ensure that loans on mortgage free properties are processed correctly, the case should be keyed as follows:
A valuation fee will be payable on these applications.
Simultaneous sale and purchase is the preferred route, but we recognise that this is not always possible.
Existing property is for sale but will not be sold before new mortgage completes - The existing mortgage payment must be keyed as a credit commitment and will be included in the affordability calculation.
Existing property to be rented out - The mortgage payment must be keyed as a credit commitment (the mortgage type for the commitment needs to by keyed as ‘Buy to Let’). The rent received should be keyed as 'Rental Income (if rental property)’.
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Scottish Widows Limited. Registered in England and Wales No. 3196171. Registered office in the United Kingdom at 25 Gresham Street, London EC2V 7HN. Authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. Financial Services Register number 181655.
Scottish Widows Unit Trust Managers Limited. Registered in England and Wales No. 1629925. Registered Office in the United Kingdom at Charlton Place, Andover, Hampshire SP10 1RE. Tel: 0345 300 2244. Authorised and regulated by the Financial Conduct Authority. Financial Services Register number 122129.
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Scottish Widows Bank is a trading name of Lloyds Bank plc. Registered office: 25 Gresham Street, London EC2V 7HN. Registered in England and Wales, no. 2065. Authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority under number 119278.