Topic 15 - Other Factors that Affect the Lending Decision

Question 1

Work that requires planning consent:

Answer 1

• Work on an existing property outside the scope of permitted development
• Work on an existing property within a conservation area
• Building a new property
• Converting an existing building e.g. a barn
• Dividing a single property into separate homes
• Work that would contravene original planning consents

Question 2

Building work subject to regulation:

Answer 2

• Erection of a new building
• Extension of an existing building
• Cavity wall insulation
• Adding or removing internal walls
• Loft conversion
• The underpinning of a building’s foundations

Question 3

What are main environmental factors causing concern?

Answer 3

• Radon gas
• Overhead electrical power lines
• Motorways
• Train-lines

Question 4

Higher lending charges:

Answer 4

When LTV exceeds a certain level, the lender may charge a higher lending charge.

Some lenders use the charge to buy a mortgage indemnity guarantee (MIG) policy

Question 5

Subrogation:

Answer 5

The right of an insurer to pursue a third party that caused an insurance loss to the insured person. In the context of a mortgage, the insurer will sue the borrower. The lender could also sue the borrower for the excess.

Question 6

What mortgage fees may be payable?

Answer 6

• Reservation fee
• Arrangement fee
• High lending charge
• Lender’s reference fee
• Adviser fee
• Mortgage packager fee

Question 7

What legal fees may be payable?

Answer 7

• Local Land Charges Registry
• Land Registry search
• Environmental search
• Drainage search
• Bankruptcy searches
• Land Registration fees
• Indemnity fees

Question 8

SDLT rates:

Answer 8

First £125,000 (Nil)
£125,000 - £250,000 (2%)
£250,000 - £925,000 (5%)
£925,000 - £1.5m (10%)

Question 9

First-time buyer SDLT exemption

Answer 9

First £300,000 (Nil)
£300,000 - £500,000 (5%)

The exemption does not apply if the property exceeds £500,000

Question 10

SDLT for joint buyers:

Answer 10

In order to benefit from the first-time buyer exemption, both must meet the definition of a first-time buyer.

Question 11

Buy-to-let and second home purchases for £40,000 or more are subject to how much additional SDLT over and above the standard rate?

Answer 11

3%.

3% on first £125,000.

£125,000 - £250,000 is 5% and so on.

Question 12

SDLT on a multiple property purchase:

Answer 12

Determined by the average value of each property so for 4 properties for £800,000, each would be charged at £200,000 each.