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Change to mortgage affordability calculation

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ONLY FOR USE BY MORTGAGE INTERMEDIARIES

What's changing?

From today we’re changing our affordability calculation for residential mortgage customers. This will mean that residential mortgage customers looking to purchase or remortgage a home could now borrow more from NatWest.

This is in response to the FCA’s call earlier this month for lenders to design their affordability rates to best meet their customers’ needs, in a market where interest rates are declining.

In addition to the calculation change, we’re introducing a new process for capturing your customer’s pension contributions. This will ensure greater accuracy in assessing a customer's affordability and suitability for mortgage products

How these changes could affect your customers borrowing power

  • Changes to residential affordability calculation: The change to the affordability calculation means that the typical mortgage customer could borrow more in certain circumstances.
  • Individual pension contributions are now included in our affordability calculations: This means that affordability is tailored to each customers individual circumstances. Please go to our A-Z Lending Criteria page for more information. 

Considerations

  • Affordability calculations will continue to be dependent on your customers individual circumstances and subject to affordability checks and loan to income limits.
  • These changes relate to residential mortgage affordability only. Buy to Let affordability calculations remain unchanged.
  • Our broker portal has been updated to allow you to input your customer's precise pension contribution amount. This enables us to provide a more accurate assessment of their affordability, accounting for the appropriate tax relief.
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