From the 23rd of November, NatWest will no longer allow customers to take their residential mortgage past their intended retirement age, however it will still allow customers who are already in receipt of pension income to take their mortgage to age 70.
The deadline for all applications to be received that have an element of lending into retirement is 21/11/2020.
On its intermediary site, NatWest outlined a range of scenarios where customers may be affected by the policy change:
1. A customer is a firefighter with an intended retirement age of 55. The customer is currently 50 years old and wants to take a 10-year mortgage term. Can we proceed? No, the mortgage term will run past the customers intended retirement age and we are no longer allowing customers to take their mortgage into retirement. You should see if you can reduce the mortgage term or refer to whole of market.
2. A customer is 55 and has retired from their main profession from which they are receiving a pension. They have continued to work in some capacity and they intend to stop working completely at the age of 67. Can we proceed? In this instance we would be able to lend to the customer providing their mortgage term finished before they stop working. This would be classed as BAU lending as the customer is still in some form of employment. Both the pension income and employed income would need to be captured. However, if the customer was wishing to take the mortgage term beyond the age of 67 then we would not be able to proceed with the application. This would be the case even if the customer’s pension income alone would be enough to afford the mortgage.
3. A customer is 55 and has fully retired. They are receiving income from a pension and can afford a mortgage based on this alone. Can we proceed? Yes, we would be able to proceed as the customer has fully retired. We define a retired customer as someone who is no longer actively working or in any form of employment.
4. A customer is working as a labourer and has said they are going to retire at 70. Can I take this customers mortgage to the age of 70? If a customer’s retirement age doesn’t look realistic based on their profession our underwriters may ask for further information. If you can provide rationale for why this is realistic then the application will be considered.
