NatWest recent changes should allow brokers to help more clients secure an interest-only mortgage.
Interest-only acceptable income types will now directly match NatWest’s capital and interest criteria.
A new minimum combined income of £100,000 per year has been introduced for joint interest-only applications, but for sole applicants the minimum qualifying income will remain at £75,000 per year.
NatWest says there may be a reduction in the maximum lend compared to previous affordability assessments because of affordability changes.
Changes in its buy-to-let proposition see buy-to-let ICR reduce from 135% to 125% for basic rate taxpayers.
For lower rate tax payers, letting agent fees are currently captured but are not included in the affordability assessment. As NatWest has reduced the ICR, letting agent fees will now be factored in for these customers.
The maximum age at the end of the term for the buy-to-let applications has increased from 70 to 80 years of age.
In the scenario of an application where by the term goes beyond the customer’s retirement age (for either one or both customers), only the rental income from the property being purchased/re-mortgaged will be used.
All sources of acceptable income will remain the same except rental income, which will no longer be used to achieve the minimum eligibility criteria of £25,000 per annum.
Cases submitted before 23rd November 2020 will not be affected by these changes unless there is a significant change, such as the case lapsing or new property details required.
Underwriters have the choice to apply these changes to an existing case if it is one which could benefit from the changes.