Housing

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Application Provision

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1

Application and Definitions

1.1

This Part applies to a firm with a Part 4A permission that includes entering into a regulated mortgage contract as lender, except:

  1. (1) [deleted.]
  2. (2) a firm with a Part 4A permission that includes effecting or carrying out a contract of insurance as principal.

1.2

This Part applies to an overseas firm only in relation to activities carried on from an establishment in the UK.

1.3

A firm that is a parent undertaking must ensure that a subsidiary undertaking complies with the requirements of this Part in relation to activities carried on from an establishment in the UK, as if it were a firm subject to those requirements.

1.4

1.3 does not apply in relation to a subsidiary undertaking that:
  1. (1) [deleted.]
  2. (2) is a firm that is otherwise subject to this Part;
  3. (3) is a firm with a Part 4A permission that includes effecting or carrying out a contract of insurance as principal; or
  4. (4) does not have a Part 4A permission which includes entering into a regulated mortgage contract as lender.

1.5

[Deleted]

1.6

[Deleted]

1.7

[Deleted]

1.8

[Deleted]

1.9

[Deleted]

1.10

[Deleted]

1.11

In this Part the following definitions apply:

credit

means the cash loan provided by a firm under a regulated mortgage contract:

  1. (1) at the time the regulated mortgage contract is entered into; or
  2. (2) drawn down at a later date.

first charge

means a legal mortgage ranking in priority ahead of all other legal mortgages (if any) affecting the land in question.

further advance

means a further amount of credit provided by a firm to an existing borrower and which is secured on the same property, whether under a new mortgage contract, or by variation to an existing mortgage contract.

high loan to income mortgage contract

means a regulated mortgage contract under which the credit provided by a firm to an individual, or to individuals jointly, is or exceeds a multiple of 4.5 times the individual’s income, or the individuals’ joint income, at the time at which that income is assessed by the firm for the purpose of entering into the regulated mortgage contract.

income

means the gross annual income, before tax or other deductions, of an individual taken into account by a firm to calculate the credit it will provide under a regulated mortgage contract.

legal mortgage

includes a legal charge and, in Scotland, a heritable security.

lifetime mortgage

has the meaning given in the FCA Handbook.

re-mortgage with no change to the principal sum outstanding

means a regulated mortgage contract as defined in Article 61(3)(a) of the Regulated Activities Order under which the amount of credit provided does not exceed that outstanding to the firm, or to a different lender, under a previous regulated mortgage contract, or any other type of contract under which the obligation to repay the credit provided is secured by a legal mortgage on land. In determining the amount of credit provided, no account shall be taken of:

  1. (1) arrangement fees;
  2. (2) professional fees and costs; and
  3. (3) administration costs.

regulated mortgage contract

has the meaning given in Article 61(3)(a) of the Regulated Activities Order, but:

  1. (1) re-mortgages with no change to the principal sum outstanding;
  2. (2) lifetime mortgages;
  3. (3) regulated mortgage contracts that are not first charge regulated mortgage contracts;
  4. (4) retirement interest-only mortgages; and
  5. (5) further advances

must be disregarded.

retirement interest-only mortgages

has the meaning given in the FCA Handbook.

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