Digital Mortgages by Atom Bank has updates for you about their improved serviceability criteria for business customers, as well as some policy updates for the healthcare sector.
What are they doing?
They have simplified and reduced their minimum serviceability criteria for the majority of businesses from 145% to 125%. With these changes, they are aiming to support more businesses by offering higher loan amounts and increasing their acceptance rates for applications. Their improved serviceability criteria will take effect for offers issued from 17th November — any issued before this date will remain subject to the current criteria.
Changes for existing customers
they want to make the end-of-term process easier for their customers. Therefore, they have introduced a specific section in their Lending Policy for existing customers looking to refinance, with the aim of benefitting valued customers as they come to the end of their term (previously, existing customers were subject to the same Lending Policy as new customers).
The section includes updates ranging from lower serviceability thresholds to different security requirements:
1) Serviceability requirements
Existing customers on a variable rate will be assessed against a stressed interest rate of margin +5%, with a minimum requirement of 100% proven serviceability. For fixed rate customers, the minimum requirement is 100% proven serviceability.
2) Guarantees
Where a guarantee was not requested at the time of offer of the original facility but would be required under current Lending Policy, they can offer a new loan without requiring a new guarantee.
3) Minimum lease lengths
The commitment term for a new facility for an existing customer can be longer than the lease length where applicable.
4) Prohibited business types
Prohibited business types can now be considered for refinance with Atom where they were within Lending Policy at the time of offer of the original facility.
What else have they changed?
They have made a number of policy updates for healthcare businesses, specifically for those in the dentistry and pharmaceutical sectors:
Dentistry
- Increased maximum LTV against property from 85% to 95% (for loans less than £500K), from 80% to 90% (for loans between £500K and £1.5m) and 70% to 85% (for loans between £1.5m and £2.5m).
- Increased maximum LTV against NHS Goodwill to up to 100% and 90% for Private Goodwill. Practices are no longer required to have a minimum of two years’ experience at management/senior level, so they can now lend to any practising or registered dentist (subject to other eligibility criteria).
- Minimum CQC rating of ‘Requires improvement’ — where a practice’s current rating is ‘Requires Improvement’, they will require evidence that the applicant has a successful track record of operating dental practices at a standard of at least ‘Good’ or has previous experience of improving dental practices from ‘Requires Improvement’.
Pharmaceutical
- Increased maximum LTV against property from 80% to 95% (for loans less than £500K), from 80% to 90% (for loans between £500K and £1.5m) and 70% to 85% (for loans between £1.5m and £2.5m).
- Increased maximum LTV against NHS Goodwill to up to 85% and 80% for Private Goodwill.
- Pharmacists are no longer required to hold appropriate qualifications, so they can now lend to any practising pharmacist on the GPhC register (subject to other eligibility criteria).
Any questions?
Get in touch with their TBDM team by email at businesssupport@digitalmortgages.net or by phone on 0333 399 0060 (9am–5pm, Mon–Fri). Alternatively, contact your RDBM.