Policy GuidelinesPolicy Guidelines

Presented by:

Patricia Flynn, Key Account Manager

Presented by:

Patricia Flynn, Key Account Manager

AgendaAgenda Debt Service Ratio (DSR) DSR Bands LTVs Additional loans Income FTB Policy Professional Mortgage Policy Residential Investment Policy Self Employed & Non National Requirements Anti Money Laundering Refinance & Free Switching Offer Self Builds Guarantors Interest Only

Debt Service Ratio (DSR)Debt Service Ratio (DSR)

First Active calculates affordibility as a percentage of the applicant’s Debt Service Ratio (DSR). This is calculated as follows:

An applicant’s total financial commitments is taken into consideration when calculating DSR, total financial commitments are all personal financial commitments which should be detailed on a monthly basis to include:

1. The new monthly mortgage repayment, which is stressed at 2% over Standard Variable rate in addition to

2. All / any all other monthly financial repayments with more than six repayments left namely Personal loans, Term loans, Leasing, Hire Purchase, Maintenance Payments and any other Mortgages (that will not be replaced by proposed new mortgage).

3. Where there is an outstanding Credit Card balance of more than €2,500, a repayment figure equivalent to 3% of the balance outstanding should also be included.

DSR BANDSDSR BANDS

Allowable Income All Mortgages up to 92% LTV

FTBs

>92%-100% LTV

FTB Professionals up to 100% LTV

€0 - €49,999 45% 40% 50%

€50K to €74,999 45% 45% 50%

€75K to €124,999 50% 50% 55%

€125K to €199,999 55% 55% 60%

€200K + 60% 60% 65%

Loan to Values (LTVs)Loan to Values (LTVs)House purchase/ Loans from €50,000 to €900,000 92%Principle PDH Loans from €900,001 & over – 85% subject to approval by

Credit Department

FTB: 100%/92% - for PDH Non residents: 80%Residential investment: Max 85%  Max LTV for Refinance: Maximum LTV 85% - This is where the customer is refinancing short term debt of maximum €40,000. Maximum LTV 80% - This is where the customer is refinancing short term debt of maximum €65,000. Maximum LTV 92% - This is where the customer is releasing and not refinancing short term debt. Where the customer is releasing equity it must be for acceptable purposes*

*Example of acceptable purposes Extension and renovation of family home (estimates or invoices not required under €65,000) Purchase of second property (family/holiday home/investment property. Educational expenses Gifts to children Once in a lifetime holiday. Private medical expenses.

NB: Where the customer is releasing equity for the purchase of a second property the maximum LTV is 85% for purchase of domestic property and 80% for non ROI property.

 

Additional LoansAdditional Loans

Max LTV for Top Up:

Maximum LTV 92% - If the top up is for acceptable purposes and is not to refinance external debt.

Maximum LTV 85% - If the top up is for acceptable purposes and is to refinance maximum

short term debt of €40,000.

Where a customer requires 92% - we can and the purposes is to refinance short term debt

of maximum €40,000, however, the following criteria applies. Mortgage must be customers for a minimum period of 2 years. Short term loans being refinanced must be held for a minimum period of 2 years. Good repayment record on mortgage and existing loans being refinanced i.e. no

missed payments in the last 2 years.

IncomeIncomeRoom RentalRental Income: Discount Gross Rental Income by 30% i.e. include 70% in the calculation of Net Monthly Income. For Customers renting a room under the “Rent a Room” scheme the maximum Rental included per room, is restricted to €400. We don’t include Rental income from foreign holiday homes.

OvertimeOvertime: Include up to 50% of the average for the previous 2 years. We may go beyond this for occupations where Overtime levels in excess of 50% can be established and other Allowances also apply.

Bonuses

Bonuses: Include up to 50% of the average for the previous 2 years.

CommissionCommission: Include up to 50% of the average of the previous 2 years.

FTB PolicyFTB PolicyWhere a customer has an LTV above 92% and meets all of the following criteria, they can avail of this

product.Max LTV: 100%Max Term: 30 yrs (for single income under €40K & Joint incomes under €50K)

35 yrs (for single incomes over €40K & Joint incomes over €50K)Debt Service Ratio (DSR): 40% = €0-€49,000

45% = €50k to €74,99950% = €75k to €124,99955% = €125K to €199,99960% = €200+

Purpose of loan: Home Loan onlyEmployment Experience: Must have min 3 yrs employment history although exceptions will be

considered for graduates with less, these will need to be referred to credit department.

Bank Experience: 6 months bank statements required.Property Type: Excludes 1 Bed Room & Studio Apartments.Site Purchase: No site purchase or direct labour. Completed properties only.Products Available: Tracker, 2 & 3 yr fixed rates and standard variable

Professional Mortgage PolicyProfessional Mortgage Policy

Where a customer is a fully qualified graduate in the following professions we will offer 100% finance.

Max LTV: 100%Max Term: 40 yrs – subject to age & term not exceeding 70 years.Debt Service Ratio (DSR) 50% = €0-€49,000

50% = €50k to €74,99955% = €75k to €124,99960% = €125K to €199,99965% = €200+

Purpose of loan: Home Loan onlyEmployment Experience: Must have 6 months employment history in current employment.Bank Experience: 6 months bank statements required.Minimum Income: €32,000

List of ProfessionalsAccountants Actuaries Dentists DoctorsLawyers Opticians Pharmacists PhysiotherapistsVets Barristers Chartered Surveyors PilotsPsychologists Architects University LecturersEngineers (CEng, FIEI, CEng MIEI & MIEI)

Residential Investment PropertiesResidential Investment Properties

Standard RIP policy Max LTV 85 % Discount rental income @ 70% 5 year Interest Only Option

Multi RIP’s

Where a customer holds a minimum of 3 or more RIP’s, the following criteria will apply. Applicant already holds a minimum of 3 RIP properties for a minimum of 12 months. Rental income must cover the interest only mortgage payment by 1.4times (for new loans). Minimum income of €75,000 Full assessment of DSR, confirmation of income & normal proofs (Bank statements etc). The customer’s personal income and expenses must be within normal DSR rules. Rental income

from other RIP’s should be obtained. Maximum LTV 75% Maximum of 5 properties (In the Ulster Bank Group).

Self Employed & Non National ReqSelf Employed & Non National Req

SELF EMPLOYED         Drawings: Any of the following forms will be

acceptable as verification of Drawings:           Completed Accountants’ report.         Two years’ Certified accounts.         Two years’ Audited accounts.         Self-Certified accounts where accompanied by

balancing statement by the revenue.         For Farmers, IFAC prepared A/Cs and/or

BA191/BA192.          If an Accountant with one of the following

qualifications has not confirmed Income confirmation then a balancing statement from the revenue is required to support the figures provided on the certificate.

         Institute of Chartered Accountants in Ireland         The Institute of Certified Public Accountants in

Ireland         Association of Chartered Certified Accountants         Chartered Institute of Management Accountants         Associate of Institute of Taxation of IrelandInstitute of Incorporated Public Accountants

NON NATIONAL

Stamp 4 required for all working applicants to the mortgage.

Anti Money LaunderingAnti Money Laundering

Photo ID – valid within 3 mths

( I.e. Passport/Driver’s Licence)Address Verification – valid within 3 months

( I.e. Utility bill/Bank Statement) – NOT a mobile phone bill

Refinance/Free switching offerRefinance/Free switching offer

First Active will cover the legal costs of switching your mortgage to First Active. Customers can avail of this free switching

offer when they avail of the First Active easyswitch service through First American title Insurance. The application form

must be marked “Free Easyswitch Case”

The following conditions apply:

The mortgage must be kept with First Active for a period of at least 5 years or if moving house before the 5 year period

is up, take out the new mortgage with First Active giving a combined period of a least 5 years. If the mortgage is moved to

Another institution before the period of 5 years is up, the customer will have to pay the costs of the remortgage (€899.00).

Subject to a minimum mortgage of €75,000. The switcher service is not available where.

a) It is a residential investment or commercial mortgage.

b) It is a shared ownership property.

c) Title is being transferred from two names to one name.

d) Security from another mortgage is to be used to secure the borrowing.

e) An equitable deposit needs to be taken over a site or other property.

f) An assignment over a bond needs to be pledged as security.

g) The mortgage is already with First Active.

In the above cases the applicant must do this through their own solicitor. All mortgage holders have the option to use their

Own solicitor to switch their mortgage to First Active. However in such cases the applicants will be liable for the full legal

Costs

Self BuildsSelf Builds

Self Builds – 100% of the cost of build – overall LTV 92%.   House plans Site map Building specifications Copy of full planning permission Details of cost of site 6 point letter (attached)Site Purchase - Up to a maximum of 80% of the Purchase Price or Site Value whichever is the lesser,

subject to Outline Planning Permission being in place and construction commencing within 6 months of drawdown of loan. In addition, up to 100% of the build cost will be financed, subject to an estimated Professional Valuation indicating that the LTV will not exceed 92%. A Professional Valuation should be obtained on completion to ensure that the final LTV does not exceed 92%.

Discounted Property - where a property is being sold at a reduced price, the loan should not exceed 100% of the contract price of the property subject to the LTV not exceeding 92%. In the case of a tenant purchase (where an applicant is purchasing the property from either the County Council or Corporation at discounted price) we will lend up to 100% of the discounted price subject to maximum LTV of 80%.

GuarantorGuarantor

       Guarantors are acceptable where the guarantor is in a position to provide additional repayment comfort. The guarantor should be a relative of one or both of the applicants and have a minimum net income in excess of €44,000. Assessment will be made on the basis of the proposed guarantor’s net free income, which should be verified (guidance as per validating information table below). The applicants should be in a career where the salary can reasonably be expected to increase in the short term to a point where they will be capable of taking the mortgage commitment over in full. Asset and Liability Statements along with Evidence of Income may be sought in respect of Guarantors.

  Parental or other Relative Supported / Guarantor Supported Mortgages: These are

Mortgages where a relative is joining in the application as a joint applicant or guarantor, purely to facilitate the granting of a mortgage for the acquisition of a principal primary residence for the principal applicant. In these cases, up to a maximum 20% of the Relative’s / Guarantor’s net free monthly income (other than in exceptional circumstances) may be inputted into the repayment capacity calculation. They will carry full joint liability in respect of the total loan

Interest OnlyInterest Only

PDH & FTB – available up to 2 years for loans equal to or less than 92% LTV

PDH – available on the Tracker Mortgage for up to 10 years – max LTV 80%

RIP – available for first 5 yearsLevel Term Life Cover Required - The Interest Only Option is only available at the beginning

of the mortgage, once the facility is up or if the client decides to revert to Capital & Interest prior to the end of their Interest Only term, the Interest Only facility is no longer available to them on that particular loan.