Mortgage Overview

1. Credit Lending 

All Lloyds TSB branded mortgages are administered by partner bank Cheltenham & Gloucester (C&G). Lloyds TSB/C&G offers LTV (loan-to-value) rates up to 90%, matching the suggestions of the FSA’s Turner Review that borrowers should have at least a 10% deposit for a mortgage. 

Lloyds also offers a ‘Lend a Hand’ mortgage for first time buyers with an LTV of 95%. 

The bank does not publish its LTI (loan-to-income) rates, however, for which the Review suggests lending 3.5 times the annual wage of a single applicant. 

The bank states that it uses credit reference agencies in all cases to make lending decisions for mortgages, personal loans, credit cards and overdrafts and that it will also use an internal check where there is an existing relationship with the customer. 

There is no policy to avoid or prevent offering unsolicited increases in credit limits to customers. The bank states that customers can request limit decreases or that no further increases are given. 

2. Debt Warning 

The bank has a statement that ‘borrowing sensibly’ will help preserve a good credit rating. It also runs a generic repossession warning for mortgage customers. 

Additionally the bank’s pre-contract agreement for personal loans carries the following warning: ‘Missing payments could have severe consequences and make obtaining credit more difficult’. It also outlines the rights of both borrower and lender under the Consumer Credit Act (1974). 

The bank provides a link to the FSA’s Money Made Clear website in its section on debt advice, though does not explicitly link to the FSA’s Debt Test tool or an equivalent. 

However, the C&G ‘Am I Eligible?’ page provides tools for customers to calculate their borrowing and repayment amounts and terms which carries a generic repossession warning at the end. 

3. Debt Management and Advice 

With regard to secured loans (mortgages) the bank recommends that customers seek free debt advice and provides links to organisations and websites including Consumer Direct, Citizens Advice Bureau, the FSA’s Money Made Clear website and the National Debtline. 

The bank also states that it will:

• Allow customers a ‘reasonable period of time’ to pay back their debt
• Talk to an agency which gives debt advice, for example the Citizens Advice Bureau, if the customer requests it
• Offer to send a debt counsellor to discuss the customer’s financial circumstances and add the fee for same to the mortgage account
• Attempt to arrange a new payment plan
• Offer to change the method the customer makes their payments by or the date they make them
• Consider extending the mortgage time period, thus reducing monthly payments
• Consider a change in mortgage type to reduce monthly repayments

Further to this the bank outlines the steps leading up to repossession of property/court action. 

Short, free-of-charge payment holidays are offered to customers who have made regular overpayments. Those who have not been overpaying may still be eligible for a break but will incur a charge and must have already made 12 monthly payments. 

With regard to unsecured loans the bank outlines ‘steps to take to pay off debt’. Amongst these steps is a reference to the bank’s ‘Debt Remedy Tool’ which provides customers with an assessment of their circumstances and access to expert advice, anonymous and free of charge. Financial ‘Health Checks’ are offered to existing customers at branch level. 

The bank states that if it repossesses a customer’s home it will give them advice about getting in touch with their local authority to find somewhere else to live. No evidence was found that the bank engages with organisations such as Shelter and the Citizens Advice Bureau to work out re-housing arrangements with the customer or on the customer’s behalf.