A person cannot be removed from the mortgage if they are going to continue to reside in the property.
If there will be additional occupants aged 17 and over (usually adult family members or spouse not a party to the mortgage, including children of the mortgagors) living in the property once the application has completed, you must select 'Yes' to the question 'Are there any persons aged 17 or older that are not on the mortgage living in the property?'.
Answering 'Yes' to this ensures that the system will drive you to capture their details on the 'Other occupants' screen.
Completing this also ensures the Consent to Mortgage form is included in the offer pack.
A Consent Form is not required for full time students living away from home, or a person who has turned 17 after the legal charge has been signed.
By signing the Consent to Mortgage form the additional occupants are waiving any legal rights over the property that they may have. Family may hold legal rights and therefore they are required to be recorded as additional occupants; if any lodger has acquired legal rights they too are required to be recorded as an additional occupant.
For Second Home Loans, family members living in the property must always be keyed as additional occupants and a Consent to Mortgage form is always required.
Please note: Consent to Mortgage forms do not apply to properties in Scotland. Therefore, when keying an application and it asks you to confirm if there are any persons aged 17 or older that are not on the mortgage, living in the property, key as 'NO'.
It is not acceptable for a sitting tenant (under a short hold tenancy) to be occupying a residential mortgaged property on completion as there is a requirement for vacant possession.
Income received from a lodger cannot be used in the affordability calculation. Up to two lodgers are acceptable providing that they are treated as a family member, i.e. sharing living accommodation.
Care must be taken if the lodger(s) has exclusive occupation of a self-contained part of the house (e.g. an annex) or the applicant does not intend to occupy the property on a permanent basis. In those types of situation, the lodger(s) may acquire legal rights.
Applicant not resident in property
It is acceptable for a borrower not to reside at the mortgaged property and be on the mortgage subject to affordability e.g. when parents buy for a child or one spouse is temporarily living abroad for their employment.
If one applicant will occupy the property as their main residence, this can be keyed as a mainstream mortgage application and normal lending limits apply.
Applicants who do not reside at the mortgaged property on Right to Buy applications or applications involving an ex-spouse or ex-partner where they are remaining in the property or named on the mortgage application must be referred to underwriters.
Applicants who do not reside at the mortgaged property on Second Home loan applications will not be approved for a loan where they intend to let their property (under a shorthold tenancy) out temporarily immediately post completion.
Please refer to Second Home Loan for more information.