Over the last couple of months, for obvious reasons, we have seen a significant increase in the number of product transfers where clients are reaching the end of their deals. However, with the advent of surveyors being able to return to work, and carry out physical valuations of property, we would expect the number of product transfers to reduce.
What has become clear is that a number of you are unclear about the record-keeping requirements for product transfers, so below is a reminder of what is needed:-
Where the client’s circumstances are unchanged (or have improved), and the new mortgage is cheaper you need to obtain one month’s bank statements which must show the household income and expenditure. You then need to add a note to the case to confirm you arranged the original mortgage (particularly important where this was on IO or Launchpad), that the client’s circumstances are unchanged, and the new mortgage is cheaper. If the case does not meet any of these criteria full documentation needs to be obtained.
Buy To Let Mortgages.
With Buy to Let mortgages we need to have the following items on file:-
- Evidence of the property being let, and not lived in by the applicant. This can be by way of a copy of the AST or bank statements showing the rental income being received.
- Evidence/Confirmation that the rental income is being declared to HMRC and that tax is being paid. Typically, this will be by way of SA302 but if the client has not started doing this then we need written confirmation from them explaining why and confirming they know they need to do so.
- Given the above two points you should then be in a position to add a note to the case to confirm the BTL mortgage is self-funding.
Please note this is not a change to the standards but confirmation of the rules introduced in 2018.
Impact of COVID-19.
Where a client has experienced a reduction income because of COVID-19, for instance, employed having been furloughed or self-employed simply seeing a drop in income because of working less hours, then to a large extent it is outside of their control.
The affordability of a mortgage will be a bigger issue for these individuals, however, we will still allow you to carry out a Product Transfer for the client, on the reduced requirements, but you must add a further note to The Key to record how your client’s income has been affected and their views about their income returning to its normal levels.
If you have any concerns impacting the advice or affordability of individual cases, then please discuss these with your Sales Manager or Richard Hamley.