NatWest will use the borrower's new revised income for affordability assessments whether their employment income has changed permanently or temporarily, or if they are on the government's Coronavirus Job Retention Scheme.
Brokers will need to provide evidence of their client's new income and a letter from their employer if they have been furloughed.
If a borrower's basic salary is reducing and not being replaced by the Government scheme, the new revised income will be used for assessment and borrowers will need to provide a letter from their employer confirming what their new income will be if their most recent payslip does not confirm the revised salary.
Where it is certain or highly likely that one or more elements of the customer’s income will stop or reduce - including overtime, bonuses or commission - then this cannot be used for an affordability assessment.
Nationwide confirmed that it will accept 80% of income if a borrower has been furloughed, but will no longer accept bonuses, overtime or commission on new applications.
Nationwide is also unable to accept any additional income, such as shift work, and will only accept zero hour contract income from key workers such as nurses, care home workers, supermarket workers and delivery drivers. Zero hour workers will need to have been employed on this basis for at least 12 months, but Nationwide has removed the ‘same employer’ requirement.
If using the lower income means a borrower fails affordability, they can choose to reduce the loan amount, extend their term (subject to criteria) or pause their application.
If the application fails affordability following a reduction in income, and the client is moving home and has already exchanged contracts, brokers are being advised to speak to their BDM.
