Lending criteria | NatWest Intermediary Solutions

Age requirements

Applicants must be at least 18 years old at the time of application. The maximum age at the end of term is 70. 

Additional Borrowing Purpose

For Remortgages: The section ‘Additional Borrowing Purpose’ on the Full Mortgage Application is there for you to specifically capture a breakdown of the use of funds for the additional borrowing amount you are requesting.

For specific guidance on additional borrowing for BTL cases, please refer to the Buy-to-Let section of our A to Z. 

Affordability

Please refer to 'Income Requirements and Packaging' on the Coronavirus Hub

Agricultural restriction

The only acceptable agricultural tie is where the applicant must be employed in an agriculture related job and the primary source of income must not be related to the secured property. This is subject to a maximum LTV of 50%. Please note, the maximum plot size normally acceptable is 4 hectares/10 acres and there should be no evidence of tenancy or commercial activity.

Annual percentage rate of charge (APRC)

The APRC is all fees associated with the mortgage, whether added to the advance or not. This includes application fees, product fees, arrangement fees, booking fees, CHAPS and Telegraphic Transfer fees, fees charge by intermediaries, mortgage exit administration fees (sealing fees) and valuation fees. It is included on the Mortgage Illustration.

There is an additional cost illustration, known as the second APRC. The second APRC presents a stressed interest rate scenario and illustrates what the product APRC would be if bank base interest rates rise to their 20-year high. Mortgages with a fixed rate for the entire term of the deal will not require this illustration.

We calculate the new APRC and second APRC in accordance with the guidance received from the Council of Mortgage Lenders (CML) and include both in the Mortgage Illustration.

Adverse credit

We consult credit reference agencies to look at credit and bank account conduct. 

We will not consider applications from individuals who have been subject to a bankruptcy order or an Individual Voluntary Arrangement in the last six years.

We can consider applications where one or more applicant(s) has a history of unsecured loan arrears. Subject to credit checks and bank account conduct carried out by an underwriter

Applicants (number of)

The maximum number of applicants is two.

Armed Forces personnel

Unsecured personal loans are only acceptable for Armed Forces personnel who are eligible for a Forces Help to Buy (FHTB) loan which is an interest-free loan repayable over 10 years:

• This will be allowed to be used towards an applicant's deposit but the monthly repayment as detailed on the Ministry of Defence ‘Personal Information Note’ must be included in outgoings for affordability.
• The FHTB loan may not be used for the purchase of a second property, including a buy-to-let property. 

Back to back

Back to back is typically where the vendor has owned the property for less than six months, or remortgages where they've owned the property for less than six months.

Solicitors are required to disclose any transaction in the last six months and, if this happens, cases will be declined after offer unless the circumstances meet one of the following situations in which lending may be considered:

• Customer funded purchase: when the customer has funded the purchase using their own funds or funds from a close family member and are now looking to set up a mortgage. The lending would be restricted to the lower of the original purchase price or valuation.
• Bridging: residential mortgage applications where the customers required a bridging loan due to delays in selling the existing property, subject to normal underwriting. The previous property has now been sold and the applicants are looking for a mortgage on the new property with funds to be used to repay the bridging loan. Buy to let applications are not acceptable in this situation.
• Inherited: a recently inherited property where the beneficiary wishes to release some of the equity for residential or buy to let purposes, or to buy the shares in the property inherited by others (e.g. siblings or joint beneficiaries). We will also consider lending where our customer wishes to purchase the property from a vendor who recently inherited the property. 
• Porting: where a fixed/discounted rate was ported to a new property but has now expired and the customer wants to remortgage within the 6 month period to gain a new rate. Proof of the rate roll off has to be obtained e.g. mortgage offer/rate roll off letter from the previous lender.
• Repossessed property: where the vendor is the mortgage lender in possession i.e. the property has been repossessed within the last six months and is being sold by the mortgage lender or their agent. This does not include repossessed properties being purchased cheaply at auction and then sold on by a third party. 
• Part exchange: where the vendor is a large national house builder selling a property acquired under a part-exchange scheme.

Bank statements

We accept internet bank statements in paper format, which don't need to be certified by the issuing bank. However, they must show your client's name and the account number. For supporting documents please refer to our packaging guide.

Bonus

For guaranteed bonuses we will consider an average of the last two years' payments (cash element only) and use 100% of it in our affordability calculation. Please note that if there has been a sharp decline in the latest year's bonus the underwriter may use 100% of the most recent year's bonus.

For discretionary bonuses we will consider an average of the last two years' payments (cash element only) and use 50% of it in our affordability calculation. Please note that if there has been a sharp decline in the latest year's bonus the underwriter may use 50% of the most recent year's bonus. We will not consider deferred bonuses.

British National working overseas

Applicants must be resident in the UK. Applications will still be considered from serving members of HM Armed Forces, UK Diplomats or UK Consular staff, following standard residential mortgage criteria. HM Armed Forces consist of the Royal Navy, Royal Marines, British Army and Royal Air Force.

Builder's Incentives

• The maximum amount of acceptable incentive is 15% of the purchase price of the property.
• Portable and proportionate incentives, such as carpets and curtains, along with other financial incentives such as support with up-front costs such as Stamp Duty, legal fees or cashback or enhanced part exchange terms can be accepted in the 5% allowance
• Non-standard items such as an upgraded kitchen or integrated appliances can be accepted as an incentive but do not need to be included in the 5% allowance. It will be the responsibility of the valuer to decide which incentives are included in the calculation 
• To comply with the requirements of the Help to Buy schemes, customers must still fund a 5% deposit themselves
• Lending is based on the lower of the purchase price of the property or the property valuation
• The purchase price will not be adjusted for incentives, unless the total amount of incentives exceeds 5% of the purchase price. Incentives greater than 5% will be deducted and lending based on the reduced purchase price (unless the property valuation is lower) The example below explains this for a New Build residential house:

– Purchase price of the property: £120,000

– Incentives total: £8,000

– Incentives to be deducted from purchase price: £8,000 - £6,000 (5% of purchase price) = £2,000

– Reduced purchase price: £120,000 - £2,000 = £118,000

Buy-to-let (purpose)

A buy-to-let mortgage can be used for:

• Purchasing new investment properties.
• Remortgaging existing portfolios.
• Equity release from unencumbered investment properties.

Capital Raising - Acceptable purposes

• permanent home improvements (including the extension of the current lease)

• equity raising to purchase another property (residential or buy to let)

• buying out an existing title holder / partner 

Buy-to-let (affordability)

Please click here for the simple and full versions of our BTL calculator.

Please confirm the amounts that we will lend by using our BTL affordability calculator, we can look at your clients individual mortgage on a simple calculator provided your client is a homeowner that will look at a property in isolation as long as it is either on a like for like remortgage or it is for a non portfolio landlord. If your client does not meet the simple rental requirements you can then look at using free income to make up the shortfall and we will lend the higher amount provided under both options.   

Buy to Let affordability must be assessed using the Buy to Let affordability calculator. 

Interest Coverage Ratio (ICR): The ratio of the expected monthly rental income from the Buy to Let property to the monthly mortgage interest payment which takes into account likely future interest rate increases.

The minimum ICR threshold will vary dependant upon the specific application type and tax status of the applicant. The standard ICR we apply is 125% for lower rate tax payers, 135% for like for like remortgages and 145% plus assumed letting agent fees for higher rate tax payers looking to buy or remortgage with additional borrowing.

We will top-slice if there is a rental shortfall, taking into account any free personal income the applicant may have. In all cases, expected rent must continue to meet a minimum rental cover calculation of 5.5% x 125%. For eligible customers earning over £75k our minimum rental cover calculation is: 100% x 5.5%.

This ICR criteria applies only to the new property being mortgaged.  Any existing rental properties will NOT be assessed individually against our ICR criteria.  We will instruct an independent valuer to validate the gross rental income and rental demand of these properties. Customers will not be charged for the additional valuations on their existing buy-to-let and rented properties.

For applications where 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.

Buy-to-let (eligibility criteria)

• The property must be in England, Scotland, Wales or Northern Ireland.
• The property must be a residential property owned by the applicant(s) and not for their own use at any time.
• Applicants must be UK nationals, EU nationals or have indefinite leave to remain in the UK.
• Applicants must be resident in the UK at the time of application.
• We will not consider multiple tenancies, Homes of Multiple Occupancy (HMO), bedsits, 'Related Person' tenancies or properties that fall under a selective licensing scheme.
• The Bank will also consider lending applications for Social Sector accommodation where property tenants will be in receipt of Housing Benefit or Housing Payment as part of Universal Credits.
• Assured Shorthold (England & Wales) tenancy agreement required/a Private Residential Tenancy under the Private Housing (Tenancies) (Scotland) Act 2016 (Scotland). We also accept 3 year ASTs.
• Business partnerships and limited companies are not accepted, although NatWest Business Banking may be able to assist.
• The maximum number of rented properties an applicant can have is ten, including the property being mortgaged.
• We cannot accept applications for regulated buy-to-let mortgages (where the occupants are immediate family members of the mortgage holder).
• Applicants must be at least 18 years old at the time of application. The maximum age at the end of term is 80.
• Minimum term is 3 years
• Maximum term is 35 years
• A minimum income of £25k pa is required, excluding personal and rental income, if a homeowner, from other buy-to-let properties. (for joint applications at least one applicant must earn £25k).
• Maximum LTV is 75% (for new build flats or houses a maximum LTV of 65% applies).
• The maximum aggregate borrowing is £3.5m 
• NatWest will lend to first time buyer / first time landlord subject to meeting affordability
• For Buy to Let remortgage applications, our minimum loan size is: £25,000 and Valuation: £50,000

Definition of a portfolio landlord

For affordability purposes we define a portfolio landlord as a customer who has four or more properties owned solely, jointly or in aggregate across all applicants that meet the following criteria:

• Rented mortgaged properties
• Residential properties with either consent-to-let or permission-to-let agreements from the current lender
• Properties must be in the UK (England, Scotland, Wales or Northern Ireland)
• Excludes properties held in a limited company

For customers with four or more rented properties, additional information will be asked for in relation to landlords’ experience, use of letting agents and future plans to expand or reduce their portfolio.

Carer's Allowance

Carer's Allowance is paid to people aged 16 or over spending at least 35 hours per week caring for someone with substantial caring needs. We accept 100% of a Carer’s Allowance.

Cashback

Where a mortgage product includes a cashback feature, it will be paid to the customer’s solicitor with their mortgage funds on the day the customer completes. The customer should agree with their solicitor how they would like to receive the cashback.

Casual employment

Contract/agency workers with income paid through a temp agency should be on a contract of no less than three months and income must be evidenced for the last 12 months. Piece workers must have a history of earnings over the past 12 months evidenced by P60s.

Certification of documents

For brokers submitting applications via intermediary.natwest.com, the declaration you will make when uploading documents now states:

For income/expenditure documents:  “I am confirming either that the scanned documentation is a true copy of an original document, or where electronic documentation is being supplied, this is an unaltered document obtained by the client directly from the corresponding business or organisation.”

For Customer Identification/Address: The documents I am submitting are true copies of original documents relating to the party/parties on this application.

The above changes also apply MTE users who should e-mail application packaging to: intermediarydocs@natwest.com

Acceptable documents

For Income/Expenditure:

•             Photograph of a hardcopy document

•             Scan of a hardcopy document

•             ‘Official’ digital version of a document (e.g. e-payslips, online PDF bank statement etc…)

•             The Photograph must be:

·                     taken from above the document

·                     Free of distortion/effects

·                     Well-lit in natural light (not taken with a flash)

·                     Clear text and numbers

·                     Easy to read throughout

·                     Whole document visible

·                     Document must not be cropped or edited

·                     PDF, GIF, PNG or JPG format

•             Each photo must contain one document/page only

Unacceptable documents

•             Screenshots from mobile/tablet/PC/laptop etc

•             Photographs of a screen

•             Manual documents (e.g. Excel spreadsheets instead of bank statements etc…)

•             Taken at an angle

•             Visible distortions or flash effects

•             Very dark

•             Unclear/blurry text and numbers

•             Difficult to read

•             Parts of document missing/cannot be read

•             Cropped or edited pictures

•             Any other file format

•             Multiple documents/pages in each photo

Child Benefit

We can accept up to 100% of working tax credits, Child Tax Credits and Child Benefit. Please note that if an applicant is heavily reliant on these benefits (the ratio of benefits to main income) then please discuss these with your BDM but be aware that the final decision remains with the underwriter. The age of an applicant's children may be a factor so we recommend submitting the awards letter with as part go the application packaging. If the applicant earns more than £50,000, then we will not include Child Benefit.

Childcare costs

We use the actual amount the customer has declared they pay in our affordability calculations for this commitment. Customers with dependants will be asked about the type of childcare they use, how often and how much they spend.

• There is no formal evidence which is required for childcare costs, however if there is a difference between what is on the evidence provided as part of the application and the declared costs, this will be challenged/discussed to ensure the correct figure is used for the customer.
• As part of the affordability discussion, you will need to clarify with the customer whether it’s certain or likely that childcare costs will change over the next 5 years. The highest figure should be used over the 5 year period.
• In some circumstances childcare costs may be unknown, for example if the customer is currently pregnant, on maternity leave or if childcare arrangements are yet to be made. Customers can suggest likely future costs or you can refer to the national average figures here (figures correct as at August 2018)

When should childcare costs not be included?

There are a number of situations where childcare cost should not be captured in the affordability calculations. These include:

• Where customers are using free childcare e.g. a relative to look after their child.
• Where the childcare costs are stopping within the next 6 months.

Commission

We can consider accepting up to 100% of the commission an applicant receives.  Evidenced by the last 3 months consecutive payslips and most recent P60.  If the most recent P60 is unavailable, or doesn’t support the 3 month annualised figure, we can still consider this income using the last 6 months consecutive payslips.

Committed expenditure

For details of committed expenditure please refer to the ‘Financial Commitments’ section.

Consent to let

The bank may be prepared to allow residential mortgage customers to rent out their current property as a buy-to-let property under a consent-to-let arrangement under the following circumstances (this is not an exhaustive list):

Customer is unable to sell their existing home before buying a new property. 

Customer is currently in or moving to tied accommodation linked to their employment (e.g. boarding school teacher, vicar/minster, estate worker, army barracks etc.) The customer may not take occupation of the property until their current employment ceases which may be many years in the future.

Customer is a member of the Armed Forces currently serving elsewhere in the UK or overseas and property has previously been used as or is intended to be their main residence in the future (we will require confirmation via a Service Number or other suitable identification).

Customers must have had their mortgage with us for a period of no less than 6 months (unless they are in Tied Accommodation or in the Armed Forces) – this is relevant for both existing and new customers.

 Customers must not have a Consent To Let on any other properties mortgaged with us.

The fee is £120 initial payment and £120 per annum payable on the anniversary of our agreement to Consent to Let. The fees are waived for (1) customers in the armed forces (2) Customers in Tied Accommodation and  (3) customers working abroad for the Foreign & Commonwealth Office.

There are no fees payable for UBNI customers.

Construction types

See 'Property Types'.

Consumer buy-to-let

Consumer buy-to-let is a type of regulated business introduced by the MCD to provide enhanced protections where buy-to-let customers are not acting for business purposes.

Our approach to identifying these customers is based on how they view their buy-to-let activity. We anticipate consumer buy-to-let will only apply to customers remortgaging a buy-to-let property where their objective is not to benefit from house price growth or rental income.

We include this question on our application: Will the property be let out for investment purposes?

By ‘investment’, we mean that you are looking to benefit from rental income or future house price growth.

If the answer to this question is ‘No’, the following message is displayed: Your selection has indicated consumer buy-to-let status. At present we do not offer this type of lending. In this case, the application will not progress.

We do not offer consumer buy-to-let mortgages.

Consumer buy-to-let will not apply to purchase transactions, customers with existing buy-to-let properties or any properties with current or future family occupancy. We will continue to apply a consent-to-let for existing NatWest mortgage customers looking to let out a property on a residential mortgage, as long as no rent is being paid by a family member as this would be a regulated BTL.

We include a disclosure on the new buy-to-let sales and offer Mortgage Illustrations to make customers aware that their loan is unregulated. We expect customer demand for this type of mortgage to be low and will monitor the emerging market to ensure we are aligned to market forces.

Contractors

For PAYE contract workers, we require one year's evidence (for example, two six-month contracts or four three-month contracts) and a contract in place for minimum of a further three to six months.

For self-employed contractors who earn more than £75,000 pa we’ll calculate their income as their average weekly contract income multiplied by 46, provided they can confirm evidence of:

• their latest 3 months’ consecutive personal bank statements for their main account (not required if their main account is with NatWest or RBS)         
• where significant business expenses are identified on the application, 3 months’ consecutive bank statements (personal or business) detailing these
• a copy of contract(s) to encompass a 12-month period, with a minimum of 6 months’ contract(s) already completed immediately preceding the date of application.
  
• they have taken no more than a six week break between contracts in the 12-month period
  
• the tax position is paid and up to date.
  

Many self-employed contractors may also trade via a Limited Company because it may be tax efficient for them to do so and subject to the criteria below we can help them under this policy . There is some additional information that you need to be aware of when submitting an application for a customer who meets these criteria:

• When using the NWIS web site or MTE to submit an application, you must key the applicant as ‘Self-employed’ NOT ‘Employed’. 
• Operating via a limited company. The applicant(s) must meet one of the following circumstances:

o   Single applicant owning 100% of the company

o   Joint application where one applicant owns 100% of the company

o   Joint application where the company is jointly owned

o   Joint application where one applicant owns 100% of the company and the other applicant is employed by the company (in this instance the employed applicant’s income should be excluded to avoid double-counting).

• Significant business expenses not reimbursed as part of an applicant’s contract. Significant business expenses as detailed below, must be fully understood, evidenced and accounted for in the affordability calculation. Significant business expenses may be, though not limited to:

o   Car/finance loans

o   Extended travel and accommodation costs

o   Training courses

o   Professional indemnity insurance

o   Partner/spouse/employee salaries

• Umbrella arrangements. We cannot use the high earning contractors’ criteria to consider applications from customers using an umbrella company arrangement. Under these circumstances we would consider an application under our PAYE contract worker policy.

Credit scoring

Credit scoring is a statistical tool used to assess an applicant for credit facilities and ranks applicants by probability of default. All applicants will be assessed using credit score and credit reference information obtained from Equifax in addition to one or more of the following:

• Information supplied as part of the application process.
• Internal data relating to existing account(s) with the group.

Dependants

This includes children under 18, those in higher education and financially dependent elderly relatives. Where the customer pays maintenance for a child, they should not be listed as a dependant.

Discounted purchase

Transactions at undervalue/gifted deposits: the purchase of a property from a family member or family business where the purchase price is less than the value and the vendor does not receive any monies for the difference between the purchase price and the valuation.

This situation is only permitted where there is a family connection and is subject to the solicitors providing a clear report on title or appropriate indemnity insurance. The maximum lend can be based on the valuation, not the actual purchase price. Provision of monies over and above the actual purchase price can be agreed at underwriter/sanctioner discretion subject to standard maximum LTV/FTVs.

Diplomatic immunity

We cannot lend to anybody working in the UK who has or may have diplomatic immunity under the Geneva Convention or inter-government treaties. This applies at all LTV levels, and is because the application would be immune from UK laws and we wouldn't be able to enforce repossession.

Early repayment charges

An early repayment charge will be incurred on any overpayment that exceeds the annual 10% limit. Please refer to the early repayment section of your Mortgage Illustration or offer document for information on early repayment charges that would be incurred if any overpayment exceeds the annual 10% limit.

Employment status

Applicants must have been living in the UK for a minimum of six months and have had six months' continuous employment in the UK. We class it as continuous where there is no break of more than 3 weeks between employments. The client would need to be in their current position for at least one month and have one month’s payslip showing their new income.  If self-employed, two years accounts required.

Existing customers

Broker services are in place to assist existing customers in the following circumstances:

·         An existing NatWest Mortgage customer moving home (see Porting)

·         An existing NatWest Mortgage customer changing rate at the end of their deal (see Product Transfer)

·         An existing RBS Mortgage customer remortgaging to NatWest (instead of a product transfer,  by exception )

·         An existing Ulster Bank NI customer remortgaging from UBNI to NatWest

For additional borrowing requests, change of term/repayment type customers should contact us direct

on 0800 400 9999  

For porting of an RBS product, customers should contact us direct on 0800 056 0567

Family purchase

See 'discounted purchase'.

Fees and charges

• Product fee: this is the fee payable for the selected product and can be added to the loan. 
• Legal fees: these are paid to the solicitor for legal work done on behalf of the customer (i.e. transfer owenership of the property to them) and work undertaken on behalf of the lender (e.g. registering the mortgage deed). 
• Occupier's consent form fee: this applies to other people living in the property age 17 or over (excluding dependants under 26). If the property is in England or Wales these people will need to sign a consent form and receive independent legal advice prior to completion, for which they are likely to be charged a fee. 
• Variable valuation fee: this covers the cost of the valuation. 
• Valuation admin fee: this covers the administration relating to the valuation (£75).
• CHAPS fee: this is a charge for sending the mortgage funds to the customer's solicitor on completion (£30).
• Early repayment charge: this is payable if customer repays all or part of a mortgage during the deal period.
• Adding fees to the loan: product fees are the only fees that can be added to the advance.
• Future fees: once your client's mortgage is set up, they may need to pay one-off fees for other services. These include changing the date of direct debit collection, duplicate statements, adding or removing someone from their title deeds.

If you'd like a copy of the individual 'fees and charges' leaflet, please contact us. 

Financial Commitments

We capture the following commitments in the ‘Financial Commitments’ section of the application form. You should ensure that the commitments captured here total the same amount of what you have used in the affordability calculator. (see also ‘Loans / Credit Cards’)

·         Maintenance / Child Support

·         Rent

·         School Fees

·         Childcare costs

·         Adult care costs

·         Ground rent

·         Service Charge

·         Estate Charge

·         Help to buy loan

·         Other committed expenditure

When using ‘Other Committed Expenditure’ please ensure you provide specific detail of the commitment captured.

‘Adult Care costs’ relate to an ongoing cost incurred to care for a dependent adult. For example, long term care for elderly dependants.

For ‘Help to Buy Loan’ please include 3% of the equity share (divided by 12) as a monthly commitment.  See also ‘Shared Equity’ section for further detail.

For specific guidance relating to Childcare costs refer to ‘Childcare costs’ section.

For specific guidance relating to contractors ‘Significant Business Expenses’ refer to the ‘Contractors’ section.

Foreign currency income

Where all or part of an applicant's income used to make the mortgage repayments is paid to them in a foreign currency, the MCD requires advisers to provide additional point of sale risk disclosures. It also requires lenders to monitor the customer’s foreign exchange exposure and notify them when it deviates adversely by 20% or more from the exchange rate at the point that the mortgage was completed.

The currencies we accept are: Great British Pound, Euro, Australian Dollar, Bulgarian Lev, Canadian Dollar, Croatian Kuna, Czech Koruna, Danish Krone, Hungarian Forint, Japanese Yen, New Zealand Dollar, Norwegian Krone, Polish Zloty, Romanian Leu, Singapore Dollar, Swedish Krona, Swiss Franc and United States Dollar.

(Also see 'Working abroad')

Foreign nationals

For a client on a Tier 1 General Visa/Highly Skilled Migrant Visa, we can consider up to 90% LTV. For all other customer applications that do not have permanent “right to reside”, the maximum LTV is restricted to 70% on a Capital & Interest repayment basis only.

For joint applications, where only one party has permanent right to reside the application should be treated as if both applicants have permanent right to reside, and we will therefore consider up to 90% LTV.

The treatment of customers with ‘Pre-Settled’ status is now aligned with customers who receive ‘Settled’ status.

• EU, EEA or Swiss citizens who apply to the EU Settlement Scheme will receive either ‘Settled’ or ‘Pre-Settled’ status
• From 12th January 2021, customers who receive either ‘Settled’ or ‘Pre-Settled’ status will be subject to normal residential and buy to let policy and lending criteria
• EU, EEA or Swiss citizens who lived in the UK before 31st December 2020 need to have received confirmation of their “Settlement Status” (Settled or Pre-Settled) before entering a mortgage application for new lending
• Irish citizens, or customers already with indefinite leave to remain, do not need to apply under the EU Settlement Scheme and therefore will be subject to normal residential and buy to let policy and lending criteria

Please read our FAQs for more information:

Foreign Nationals FAQs.

Freehold Flats/Flying Freehold Properties

• Acceptable but only where it is possible to enforce positive covenants against other occupants of the building i.e. a written agreement is in place to ensure maintenance, repair and insurance of the building and common parts are shared equitably amongst all residents

• The valuation must confirm the property is readily saleable and a Solicitor confirms the Title is good and marketable

• Maximum Loan to Value is restricted to 90%

• AVM / HPI Valuations and the Fees Free Mortgage product are not suitable for this type of property

Gifted deposit:  Builder's incentive  

(see 'Builder's incentives’)

We reserve the right to ask for proof of deposit on all mortgage applications. There is a section on our application form to provide an explanation of how you have verified the source of deposit e.g. savings, gift, etc. We do not ask you to submit evidence of this up-front, however the underwriter may wish to see evidence where they have any concerns or doubts.

Gifted deposit: family gift

We accept deposits (and gifts) from parents and guardians and treat them as if they were the applicant’s own deposit.

This applies even where the money is advanced against a formal loan agreement or a second charge is put in place to secure the parents’ rights. Any monthly cost relating to a formal loan agreement must be included in the affordability calculation.

Gifted deposit: Transactions at undervalue

The purchase o f a property from a family member / family business where the purchase price is less than the value and the vendor does not receive any monies for the difference between the purchase price and the valuation. This situation is only permitted where there is a family connection and subject to the Solicitors providing a clear report on title or appropriate indemnity insurance.

The maximum lend can be based on the  valuation not the actual purchase price. Provision of monies over and above the actual purchase price can be agreed subject to standard maximum LTVs.

Gifted deposit: Third parties (not sellers / vendors

Are an acceptable source of customer deposit, but only where there is no repayment required.

Gifted deposit: vendor

Deposits provided by a private vendor by way of a second charge or unsecured loan are not acceptable. Vendor gifted deposits, where no repayment is required, must be treated as an incentive and be deducted from the gross purchase price to establish the net purchase price of the property. If, for example, the vendor is offering to pay Stamp Duty/legal fees/cashback on the property being purchased this amount must be treated as an incentive and be deducted from the gross purchase price to obtain the net purchase price. We will base our maximum lend on the net purchase price or valuation whichever is the lower, with the applicant putting their own deposit in.

Green Mortgages

Green mortgages are available to all intermediaries for all residential property purchases only with an energy performance rating of A or B.

Please note the following information:

·         Property must be in the UK.

·         There must be a valid Energy Performance Certificate (EPC) listed on the registers detailed below with a rating of A or B to be eligible. No other EPC data registers or documentation will be accepted, for example a Predicted Energy Assessment (PEA).  

·         Properties where there is currently only a proposed or anticipated EPC Rating of A or B are not eligible.

·         Acceptable EPC registers: 

·         New Government England, Wales & Northern Ireland Register: 

https://find-energy-certificate.digital.communities.gov.uk/

·         Scotland Register: 

https://www.scottishepcregister.org.uk/

·         England & Wales Register Pre September 2020: 

https://www.epcregister.com/

·         Northern Ireland Register Pre September 2020: 

https://www.epbniregister.com/

·         It is the brokers responsibility to ensure the appropriately rated A or B certificate is in place prior to the application submission

·         Energy Performance Certificate must be valid within 10 years since production.

·         No additional documentation to our standard application packaging requirements is required to be submitted.

·         Available to first time buyers and existing homeowners.

·         Products available up to 85% Loan To Value. (The maximum LTV for new build properties is 80%)

·         Not applicable for Shared Equity or Help to Buy applications.

·         Residential purchases only. Not applicable for Buy to Lets.

·         All standard NatWest lending rules and policies apply. 

If you have any further questions, please review our FAQs

Guarantors

We do not currently support mortgages backed by a guarantor.

Help to Buy: shared equity (Purchase)

Help to Buy shared equity mortgages are open to all intermediaries and available for new build properties only. Please note the following information:

• Property must be in England.
• Maximum property value is capped by region

• All applicants must be first time buyers
• Applicants need a minimum 5% deposit.
• Government will loan up to 20% of property value.
• Applicant's mortgage must be for a minimum of 25% of the property value
• Part Exchanges not permitted
• It must be the primary residential and only property.
• We offer specific 75% LTV mortgages to support this scheme.
• Need to apply for eligibility through a HomeBuy Agent in region of desired property.
• We require a minimum 5% deposit from the applicant and the minimum LTV must be 25%. 3% of the equity share will need to be factored into the affordability calculation as a monthly commitment.

Help to Buy: London

The customer must have a minimum deposit of 5% and the Government will provide an equity loan of up to 20% of the property value.  In specific London boroughs the Government may provide an equity loan of up to 40%. The equity loan must be repaid by the end of the mortgage term or upon the sale of the property, whichever comes first. The customer must take a mortgage of at least 25% of the value of the property they are purchasing.

Help to Buy: shared equity (Remortgage)

Customers with a Help to Buy Shared Equity mortgage with another lender will be able to remortgage to us on a like for like basis, keeping the same balance and term. To switch, customers need to notify the Home and Communities Agency (HCA) and, if applicable, the Developer Lender for consent to change mortgage lender.

• On completion we will provide customers with £500 cashback to offset the scheme fees charged when changing lenders.
• Customers are required to pay a Deed of Postponement administration fee of £115 to the HCA through their scheme administrators (Target) and need to do this directly themselves – they can call them on 0345 848 0235.
• Customers are required to pay a Deed of Postponement fee of £150 + VAT (Some developers also charge £150 when changing mortgage provider) and £95 + VAT for additional legal work to complete this by our solicitors whilst interacting with Target.
• Customers will also be required to pay a CHAPS fee of £30 + VAT.  (If there is any remaining funds to be paid back to the customer there is an additional chaps fee of £30 + VAT (customer has option to have this paid by cheque free of charge).
  
• Customers wanting to complete a Transfer of Title to remove a party from the mortgage are required to pay an administration fee of £50 to the HCA.
  
• Our solicitors will act on behalf of the customer to process their application and provide the scheme administrator, Target, with the necessary paperwork.
• All Help to Buy Shared Equity Scheme rules and policies apply. 
• If a customer is looking to repay any shared equity loan then we can also help with any of our standard remortgage products.
• 3% of the equity share will need to be factored into the affordability calculation as a monthly commitment.
  

Incapacity benefit (now known as Employment & Support Allowance)

We can consider up to 100% of incapacity benefit as an additional income, subject to an underwriter’s discretion. 

Identification

As part of the scoring process, we will attempt to electronically verify and validate the identity of an applicant. If successful, you will receive a message at the point of application submission to confirm that we will not require any further proof of identity for your customer. Where we are unable to verify their identity, you will be asked to send us certified copies of their identity documents.

Interest only

In addition to standard mortgage criteria the following also applies for Interest only mortgages: 

Minimum income of £75,000 for sole applicants.

For joint applications at least one applicant can earn £75,000, or the joint applicants can earn a combined income of £100,000.

Qualifying Income Examples

App Type             Income                 Outcome

Sole                       £75K                        Meets minimum income - £75k sole income criteria

Joint                      £50K + £60K        Meets minimum income - £100k combined income criteria

Joint                      £75K + £20K        Meets minimum income - £75k sole income criteria

Joint                      £50K + £40K        Fails minimum income - Neither £75k sole or £100k joint income

• Both new and existing customers may apply.
• LTV of up to 75% (if repayment strategy is Sale of Property interest only amount cannot exceed 50% LTV.  A further 25% LTV can be borrowed on a C&I repayment basis).
• Residential - Maximum term of 35 years (30 years if a loan is more than £500,000)
• Buy to let - Maximum term of 35 years if the loan is more than £500,000
• Age range of 18-70.
• Minimum interest only portion of loan is £25,000.
• Available for purchase (including first time buyer), re-mortgage, additional borrowing and porting.
• Debt consolidation is not permitted

• Where the entire mortgage is on IO the property must have a minimum equity of £200,000
• Where there is an element of IO and Capital & Interest (C&I) the underwriter must be satisfied there is a minimum of £200,000 equity at end of term when C&I element has been repaid. 
• We’ll require the Interest Only form to be completed by the customer to confirm their intention is to sell the property and use the remaining equity to downsize.

• Customers who do not have the right to reside for the duration of the mortgage. (For joint applications when one party has the right to reside for the duration of the mortgage and the other does not, the application should be treated as if both applicants have the right to reside the duration of the mortgage).

Japanese knotweed

The valuer will assess each case on an individual basis taking into account factors such as marketability, mortgageabilty and insurability. For more information on the RICS categories and definitions, and the NatWest Groups requirements please view this document.

Job Relocation

Where a customer is relocating their residential home an underwriter may ask for clarity on the customers ongoing employment sustainability.

Please update the notes section of the Mortgage Application Form or send in a memo clarifying your consideration where you have accounted for unreasonable commuting, existing role consistency in the new area or establishing a new customer base to support the mortgage application.

Large acreage

We will not consider properties with a plot size in excess of 4 hectares/10 acres.

Leasehold

We require a minimum of 30 years to be remaining on the lease at the end of the mortgage term. However, some flexibility is allowed for properties in prime locations in central London, where the minimum lease left at the end of the mortgage should be 10 years. If the lease left is under 85 years, then please discuss this with your BDM for further guidance. 

In all instances, assessment will be made based on the valuer's comments.

Lending limits

Let-to-buy

If the rent received on the existing property covers the mortgage payment we will not include this in our affordability assessment on the new property.   

• Applicants need a letter from a local ARLA-registered letting agent or estate agent to show the expected rental income. If it covers the mortgage cost then this payment can generally be disregarded from the affordability calculation. If there is a shortfall in rent then this must be disclosed as a monthly commitment on the affordability calculator.

Letting to a family member (regulated buy-to-let)

We do not currently support regulated buy-to-let.

Limited company directors

For limited company directors applying for a mortgage, we take an average of their last two years' salary and dividends. Directors must own at least 20% of the company.

For self-employed applicants where there has been a reduction in profits/income from the previous year to the most recent year, underwriters may use the most recent lower figure, rather than an average of the last two years.

Live / Work properties

If the customer intends to run a business from the property, we can provide a mortgage only if the property is being purchased primarily for residential use and can be readily restored in its entirety to owner occupation. Typical examples of these customers might be architects, accountants, chiropractors, physiotherapists, etc. running a business from an office or room in their home. 

To qualify for a residential mortgage or buy-to-let, the work area of the property must be no greater than 20% of the total property area. Live/Work properties are not to be used as commercial outlets, as only one room in the property is dedicated for business use. 

Where a customer is purchasing a purpose built Live/Work unit located in a development of a similar type properties, we will not offer a residential mortgage. The title restrictions on this type of property can affect future sale. Unacceptable commercial activity includes but is not limited to:

• Bed and breakfast, guest houses, holiday let accommodation
• Country estates, equestrian centres, campsites, kennels, farms or agricultural use or livestock kept for commercial purposes, forestry, fishing/hunting rights and crofts (regardless of whether this is to meet agricultural restrictions)
• Post Offices. 

Loans / Credit Cards 

We capture the following commitments in the ‘Loans / Credit Cards’ section of the application form. You should ensure that the commitments captured here total the same amount of what you have used in the affordability calculator. (see also ‘Financial Commitments’)

·         Credit Card

·         Store Card

·         Hire Purchase

·         Personal Contract Purchase (PCP)

·         Unsecured Loan

·         Secured Loan

·         Student Loan

Maintenance

We can accept income from court ordered maintenance, child maintenance, and income from family-based or non-court ordered maintenance and child maintenance provided that the payments have been in place for at least six months and are expected to continue at the current level for the foreseeable future, taking into account the age of children.

Maternity leave

We require evidence of an applicant's income via their most recent three months' bank statements and their last three months' payslips, prior to their maternity leave. We will use the applicant's basic salary they earned prior to going on maternity leave for affordability purposes. We reserve the right to request additional information if required. We will ask the applicant to confirm that they intend to return to work after their maternity leave but will not seek the employer to confirm.

Maximum LTV: residential

The maximum LTV for a standard residential is 90%. The maximum LTV for a new build house is 80% and for a new build flat is 75%, on a residential basis (subject to product range). The maximum LTV for a remortgage where there is capital raising is 80%, and like for like remortgage is 85%. Also see 'Lending limits'

Maximum LTV: buy-to-let

The maximum LTV for a standard buy-to-let is 75%. The maximum LTV for a new build buy-to-let is 65% on both houses and flats (subject to product range).  Also see 'Lending limits'

Mortgage Credit Directive

The European Mortgage Credit Directive (MCD) came into force on 21 March 2016. It aims to harmonise mortgage markets across the European Economic Area, ensuring that mortgage firms act fairly and professionally and that their staff have an appropriate level of knowledge and competence for advising, manufacturing and servicing mortgages. The key issues that lenders and brokers had to incorporate into their businesses were:

• The Key Facts Illustration (KFI) was replaced by the new European Standard Information Sheet (ESIS), which incorporates a new Annual Percentage Rate of Charge (APRC) and second APRC.
• A new approach to monitoring customers’ foreign exchange exposure, including where part or all of their income is in a currency other than sterling.
• A new classification of consumer buy-to-let mortgages.
• A new 7-day reflection period.
• Greater transparency over declined applications.
• Regulation of second charge lending.

European Standard Information Sheet (ESIS): the MCD replaced the old sale and offer Key Facts Illustration (KFI) documentation with a new European Standard Information Sheet (ESIS) template, called a Mortgage Illustration in the UK. This document includes some additional disclosures for customers to ensure they fully understand their mortgage product and the risks of future interest rate increases. Transitional arrangements are in place to enable lenders to use a KFI 'top-up' approach before moving to the new Mortgage Illustration no later than March 2019. We have implemented the use of the new Mortgage Illustration without the transitional step of using the KFI 'top-up'.

7-day reflection period: the MCD introduced a new 7-day reflection period to ensure borrowers have sufficient time to duly consider the various offers they receive. Therefore, when a mortgage offer is made to a customer, there is a 7-day reflection period where the customer’s offer will remain valid for them to accept. At any point during this period the customer can accept the offer, and likewise reject it, or allow the offer to lapse.

We already give our customers longer than 7 days for them to consider offers they receive, so this will not have any impact on our current processes. If a customer wishes to complete the mortgage at any point during the 7-day reflection period they can waive the period by accepting the offer. We will still retain our right to review our decision to lend should new information be provided that changes a customer's eligibility.

Mortgage application declines: the MCD required greater transparency when a mortgage application is declined by a lender. If a customer has their application declined, they need to be told of this decision in a timely manner. Furthermore, if the decline is as a result of information held about the customer by a credit reference agency, the applicant must be informed of the particular agency used.

We currently use Equifax as our credit reference agency of choice. Where a customer’s application is being arranged by an intermediary and is declined, it is the responsibility of the intermediary to inform the customer of the credit reference agency used if this is the reason for the decline.

Regulation of second charge mortgages: the MCD required that second charge lending becomes subject to FCA mortgage rules. Lenders’ and intermediaries’ existing mortgage permissions enable them to operate in the second charge lending sector and the FCA contacted them in the first quarter of 2016 to find out if they intend to do so. We do not currently operate in the second charge lending sector and have no intentions to do so.

Mortgage Prisoners

Mortgage Prisoners are a group of customers identified by the FCA, who, following a Mortgage Market Review, have been unable to switch to a better mortgage deal with their existing or to a new lender.

Click here for further information on FCA Mortgage Prisoners
             

Mortgage Prisoner customers should approach an FCA Mortgage Prisoner approved broker to enquire and apply. We are unable to accept applications from brokers who are not registered and approved by the FCA for Mortgage Prisoner cases. 

We contacted all the Mortgage Prisoner FCA approved firms at the point that the FCA launched the Mortgage Prisoner initiative, with guidance on how to submit this type of application to us. Should your firm not have received this guidance or have only recently been approved to provide these mortgages, first please check that your firm is named in the FCA approved list via the link above. Once your firm’s name appears on the FCA approved list, contact your BDM who will be able to provide you with the guidance.

Mortgage Prisoner customers should be referred to their current mortgage provider for more details on their options.                                                                

New build

A new build is defined as any property built, first occupied in its current state or significantly modernised, refurbished or altered within the last two years.

The maximum loan-to-value on a residential new build house is 80% (65% for buy-to-let). For a residential new build flat, the maximum is 75% (65% for new build buy-to-let flats). The amount will be calculated on the net purchase price or the valuation, whichever is the lower.  Also see 'Builder's Incentives' and 'Offer of Loan - validity'

New build Structural Warranties

We will only lend on New Builds/ Renovations where one of the following 10 year or more Structural Warranties are in place:

• NHBC

• Zurich Municipal (not available from August 09)

• Trenwick International

• Premier Guarantee *

• Build Zone & Buildcare

• Building Lifeplans Limited (BLP, Allianz Guarantee )

• Ward Cole (12 year structural warranty)

• LABC (New Home Warranty – not self build)

• Castle 10 ( Checkmate)

• Build Assure (New Home Structural Defects Insurance)

• Global Home Warranties

• The Q Policy

• Protek New Home Warranty

• Aedis Group Homeproof Structural Warranties

• Advantage Warranties

• International Construction Warranties

• Ark Residential New Build Latent Defects Insurance

* Premier Guarantee Warranties for flats will be referred to us by the acting solicitor – check the amount of cover at least equals the reinstatement figure on the Valuation report.

Professional Consultant Certificate

In the absence of any of the above warranties we will accept a Professional Consultant Certificate, from a suitably qualified professional, if provided in the format detailed in the CML Lenders Handbook. The Solicitor acting for the Bank should confirm the requirements are met and that the Certificate was issued prior to exchange of contracts. Architects certificates without the benefit of the Professional Consultant Certificate are not acceptable.

Structural warranties issued retrospectively cannot be accepted.

Offer of loan (validity)

Standard mortgage offers are valid for six months.

New Build mortgage offers are valid for six months. Brokers may request an extension to an existing New Build mortgage offer at any point during the initial six months meaning that customers could have a total offer period of up to twelve months. This will be subject to succesful refresh of a credit search and property valuation. To request a New Build offer extension a broker should populate an offer extension template found in the Forms and Guides  section of this website.  Please refer to our FAQ's for further information on this.

Overpayments

You can overpay a maximum of 10% of your outstanding mortgage balance in each 12 month period – commencing on completion of your mortgage and continuing from each anniversary of that date until the end date of the rate – without incurring an early repayment charge. If your mortgage is made up of more than one part you can overpay up to a maximum of 10% of the outstanding balance of each part.

An early repayment charge will be incurred on any overpayment that exceeds the annual 10% limit. You benefit immediately from overpaying directly to your mortgage. If you make an overpayment or lump sum payment then the amount you owe, and the amount of interest you pay, is reduced immediately.

Regular overpayments: You can arrange to set up, discontinue or alter a regular overpayment in writing or by telephone at any time after completion of the loan. We must receive your request at least 14 days prior to your next payment day in order to be processed in time for that payment, otherwise the change will take effect from the following your payment day.

Regular overpayment amounts will be collected with your monthly payment and will not be varied automatically as a result of any change to the interest rate. The agreed overpayment will continue to be collected with the revised monthly payment after any such change.

Overtime

We can consider 100% of regular overtime evidenced by the last 3 months consecutive payslips and most recent P60.  If the most recent P60 is unavailable, or doesn’t support the 3 month annualised figure, we can still consider this income using the last 6 months consecutive payslips.

Porting

To obtain a Mortgage Illustration for your customer, go to our Forms and Guides section and download the Mortgage illustration request form.  Please complete and send it to illustrations@natwest.com.  We will email the Mortgage Illustration to you within 48 hours. 

Ported applications can be submitted online and the generic ‘Ported Product’ should be selected from the drop down product menu.  Full details of the product mix should be supplied in the additional information section.

Applications submitted prior to 31^st January 2021 will have a 6 month porting window, as per the current Covid-linked extension. Applications submitted on or after 1^st February 2021 will have a 4 month porting window, as per the customer’s original Mortgage Illustration.

We do not consider porting applications where the customer’s existing mortgage has already been redeemed on/before the date that they apply for the new mortgage OR they already own/co-own the property they are seeking a new application on.

• Please note that a new business rate should be selected for any top up borrowing on porting cases in excess of £10,000

For customers of the below brands who wish to port, the customer must contact the number below directly:

• The One Account: contact TOA new business sales on to 03453 01 01 01.
  
• First Active: contact First Active mortgage sales support team on 08453 011 301.
• Ulster Bank: contact Ulster on 02890 276 431

Probation

There should be six months of continuous employment, although this doesn't need to be with the same employer. In the event of a joint application where affordability is met based on the main applicants income only, there is no requirement for the joint party to meet the continuous employment requirements. 

Applications can be considered from graduates who are in full time employment and completing a period of probation, as it is rare for permanent status not to be confirmed.

Procuration fees

Residential mortgages: 0.35% gross (DA firms), or 0.40% gross (AR firms).

Buy-to-let mortgages: 0.45% gross (both DA and AR firms).

Product Transfer: 0.20% gross (both DA and AR firms).

Maximum £10,000

Minimum £250

Information correct as at Feb 2019.

Product Transfer

We offer a facility to enable you to assist existing NatWest mortgage customers to switch to a new NatWest mortgage rate when their current deal comes to an end.

• Available for both residential and buy to let business for customers who are within their 110 day roll- off period, those on standard variable rate (SVR)and those with ‘track and switch’ functionality.
• The service offers a free House Price Index (HPI) value to ensure that the most appropriate LTV deal is offered to customers.
  
• The balance available to switch must meet a product minimum of £10,000. This Product Transfer service is not available to customers wanting to exit an existing deal ahead of the roll-off period, change the mortgage term or repayment type or those whose mortgage is in arrears. 
• For additional guidance on how to submit an Additional Borrowing application, please visit our dedicated page: Additional Borrowing

Property types - acceptable 

Subject to the valuer confirming saleability and suitability for mortgage purposes, we can lend against the following:

• No-fines concrete construction.
• Steel framed houses (exceptions apply, please check).
• Flats over or immediately alongside business premises.
• 100% timber construction.
• Properties containing high alumina cement.
• Freehold flats - where it is possible to enforce positive covenants, the maximum LTV is restricted to 85%. Before considering lending against this type of property, we rely on the valuer’s recommendations and the solicitor’s confirmation that the property title is good and marketable.
• Agricultural restrictions - the maximum LTV will usually be 50% but each case will be assessed on its own merits.
• Properties used for business - we can only lend if the property is primarily for residential use and the work area of the property is 20% of the total property area or less.
• Leasehold properties - there must be at least 30 years left on the lease at the end of the term (we may consider less for properties in central London).
• Flats (on any level) in multi-storey type properties are usually acceptable, subject to exceptions e.g. where the valuer identifies issues with the building and/or locality which are likely to adversely affect resale.

Property types - unacceptable

• Properties with a floor area of less than 30m2.
• Properties with a plot size in excess of 4 hectares/10 acres.
• Properties listed under the Housing Defects Act (valuers will advise us if the property falls within the Act).
• Steel clad houses.
• System built concrete construction.
• Prefabricated/(pre)reinforced/poured or shuttered concrete construction.
• Easi-form construction (except by Laing from 1945 onwards).
• Mundic block property.
• Properties built on contaminated land.
• Timber-framed property with cavity wall insulation unless installed during construction.
• Multi-ownership properties.
• Shared ownership properties.
• Working farms, smallholdings and crofts.
• Where the purchase of the property was completed within the last 6 months e.g. where a property has been purchased either with a mortgage or short-term loan and a mortgage application has been submitted immediately or shortly afterwards. This does not affect applications from customers who have had a bridging loan simply because of delays in selling the existing property, subject to normal underwriting.

Property Locations

We lend to customers in England, Wales, Scotland, Northern Ireland and the Isles of Scilly.

Reduction in income

For self-employed applicants where there has been a reduction in profits/income from the previous year to the most recent year, underwriters may use the most recent lower figure, rather than an average of the last two years.

Regular bonuses

For regular bonuses that are paid monthly, we can consider up to 100% (cash element only) providing there is three months of evidence and most recent P60.  If the most recent P60 is unavailable, or doesn’t support the 3 month annualised figure, we can still consider this income using the last 6 months consecutive payslips.  This will be subject to the full underwrite. Please note that we cannot use this income as part of the minimum income of £75,000 for interest-only mortgages.

Remortgage fees

See 'Solicitors' fees'

Rental income (surplus)

We can take surplus rental income into account if it can be can be evidenced by two years of accounts or SA302s. We will take an average of the last two years' net profits.

Rental yield

Refer to 'Buy-to-let (affordability)'

Repayment methods

The following methods are acceptable: capital and interest (C&I), interest only (IO) and mixed.

Retirement Lending - Residential

We no longer accept residential lending into retirement applications. If a customer is wanting to take out a residential mortgage product with NatWest they will need to reduce their term to within their intended retirement age.

Where a customer is already retired and is able to evidence their income we will allow them to borrow during retirement.

For further information on the changes to lending into retirement refer to the scenarios covered in the FAQ’s.

We are investigating a solution that would allow a customer whose existing term takes them into retirement to  port like for like via a broker in the future. Currently, where the customer is looking to do this and their existing term goes into retirement, they should contact us directly.

We will no longer allow customers to take any additional borrowing where the additional borrowing term extends into retirement.

The maximum age at the end of the term is 70 and the maximum term is 35 years.

All of the above requirements apply equally to employed and self-employed applicants.

Retirement Lending - BTL

Where an applicant is looking to take their buy to let mortgage past their intended retirement age and their income will be relied upon to service the mortgage, we will require details of their income into retirement. The level of information required will depend on how far away from retirement the applicant is at the time of application.

If the applicant is more than 10 years away from their intended retirement age at the point of application you must provide documentary evidence of the existence of a pension or retirement provision (this can be a pension contribution on a pay slip, pension statement, etc.). There is no requirement to prove the pension will yield an income sufficient to repay the mortgage. 

If the applicant is less than 10 years away from their intended retirement age at the point of application you must provide documentary evidence of the applicant's post retirement income in the form of one of the following (this list is not exhaustive):

• Annual pension statement from the employer or pension provider(s) showing the age (or date) when the pension becomes payable and the amount.
• Department of Work and Pensions forecast of Graduated, SERPs or State Pension with details as above.
• Statement/letters from previous employers showing the values of preserved pensions, the date they become payable and the basis of indexation/revaluation.
• Tax return, accounts or bank statements showing receipt of income from investments or net rental income (after costs including mortgage payments).

An affordability check will be carried out utilising the income in retirement to ensure the requested amount is affordable for the whole term. Underwriters will assess the credibility of the applicant's retirement age in relation to the applicant's occupation. It will be assumed that commitments will have been repaid by the applicant's intended retirement age.

If the retirement income is insufficient, or the evidence is unsatisfactory, the term and/or amount will be reduced to ensure repayment of the borrowing by retirement. The maximum age at the end of the term is 70 and the maximum term is 35 years. For non-income providers these checks are not required.

All of the above requirements apply equally to employed and self-employed applicants.

Right to buy

(Properties in England, Scotland and Wales)

·         For right to buy properties, we will lend 100% of the discounted purchase price subject to a maximum of 90% of the open market value (subject to LTV max of current product range).

·         The minimum loan is £10,000, or the product-specific minimum, whichever is greater.

·         Further advances for non property related purposes are not allowed during any discount period.

·         Applicants can raise additional funds for home improvements, the amount they can raise is determined by the discount period given by the council. For example, if a property is worth £100,000, and the client has been offered to purchase this property for £60,000, we will allow them to borrow £60,000 plus some additional money for home improvements. On a 5 year scheme this will be 1/5th of the £40,000 discount and on a 3 year scheme this will be 1/3rd of the £40,000 discount given. This is subject to credit score and affordability.

·        Right to buy Scotland closed on 31^st July 2016

·        Right to buy Wales closed on 27th January 2019

(Properties in Northern Ireland)

·         NIHE properties – we will consider lending up to 100% of the purchase price provided the loan to free market value does not exceed 80%. 

·         Private Housing Associations – we will consider lending up to a maximum of 90% of the purchase price.

Scottish transcripts and home reports

Transcripts are only acceptable for Scottish residential property purchases and only where they are a re-type of the Home Report valuation. The home report valuation must have been carried out by a valuer on our panel and be less than three months old. We must instruct the transcript request. Transcripts instructed by any other party are not acceptable. 

Transcripts will not be requested where the property has an estimated value of more than £1m.  For buy-to-let purchases, a standard valuation will instead be instructed.

Seafarers

We can consider Sea Farers income if this is paid in an acceptable currency to NatWest and can be evidenced via payslips (if tax is paid source) or via most recent 2 years SA302s. The client must also have permanent right to reside in the UK & must live in the UK when not at sea.

Search Indemnity Insurance

We allow search indemnity insurance arranged by clients solicitor for England, Wales, Scotland and Northern Ireland for purchase (on a temporary basis) and remortgage cases providing the search insurance adequately protects us and the solicitor is able to certify that the title is good and marketable. 

The search indemnity policy will cover local authority searches rather than Land Registry searches. We would still expect solicitors to carry out Land Registry searches (this can be done online for £3).

We will accept personal searches, provided that the search agent has the adequate professional indemnity insurance and you can still give a clear Certificate of Title

Self-build

We do not currently support self-build mortgages.  

Self-build Remortgage

We are unable to support customers seeking to remortgage a self build property completed in the last 2 years. Customers can continue to remortgage to older self build properties.

Self-employed

Please refer to 'Income Requirements and Packaging' on the Coronavirus Hub

We lend on the Government-backed shared equity schemes. We require a minimum 5% deposit from the applicant and the minimum LTV must be 25%. 3% of the equity share will need to be factored into the affordability calculation as a monthly commitment. We do not currently offer a shared equity scheme remortgage product. The following eligibility criteria apply:

• The applicant will be planning to live in the house and not rent it out i.e. it will be the main residence
• The applicant cannot own any other property, in full or in part
• The property must be in the UK
• The applicant(s) must meet our affordability criteria
• The applicant(s) must meet our underwriting criteria such as an acceptable valuation and being able to provide proof of income, etc.
• The mortgage must be taken out on a capital and interest repayment basis
• The scheme is available to existing homeowners and first-time buyers purchasing a property.

Unsecured personal loans are not acceptable as a source of deposit. The only exception is armed forces personnel who are eligible for a Forces Help to Buy (FHTB) loan which is an interest free loan repayable over 10 years. The loan can be used towards the customer’s deposit but the monthly repayment must be included in outgoings for affordability. The FHTB loan may not be used for the purchase of a second property including a Buy to Let property.  The Long Service Advance of Pay scheme will be suspended whilst the Forces Help to Buy scheme is in place.

Gifted deposit: family gift

We accept deposits (and gifts) from parents and guardians and treat them as if they were the applicant’s own deposit.

This applies even where the money is advanced against a formal loan agreement or a second charge is put in place to secure the parents’ rights. Any monthly cost relating to a formal loan agreement must be included in the affordability calculation.

Gifted deposit: Transactions at undervalue

• The purchase o f a property from a family member / family business where the purchase price is less than the value and the vendor does not receive any monies for the difference between the purchase price and the valuation. This situation is only permitted where there is a family connection and subject to the Solicitors providing a clear report on title or appropriate indemnity insurance.
• The maximum lend can be based on the  valuation not the actual purchase price. Provision of monies over and above the actual purchase price can be agreed subject to standard maximum LTVs.

Gifted deposit: Third parties (not sellers / vendors

Are an acceptable source of customer deposit, but only where there is no repayment required.

Gifted deposit: vendor

• Deposits provided by a private vendor by way of a second charge or unsecured loan are not acceptable. Vendor gifted deposits, where no repayment is required, must be treated as an incentive and be deducted from the gross purchase price to establish the net purchase price of the property. If, for example, the vendor is offering to pay Stamp Duty/legal fees/cashback on the property being purchased this amount must be treated as an incentive and be deducted from the gross purchase price to obtain the net purchase price.
• We will base our maximum lend on the net purchase price or valuation whichever is the lower, with the applicant putting their own deposit in.

Deposit: Equity from property

• Where equity is being raised on an existing Residential property that is not being sold , All costs relating to the existing property must be included in the affordability calculation, including any increases due to the release of equity.
• Where equity is being raised on an Buy To Let property, Any shortfall between Mortgage Payment and Rental Income must be included in the affordability calculation, including any increases due to the release of equity.

Deposit: Sale of Property

Where the customer is using the proceeds from a house sale to fund the new property deposit. Where there will be no on-going liabilities.

Deposit: Savings

How have the savings been built up/ obtained? Is it realistic based on the customer circumstances/ household income? Underwriter may request evidence.

Tenure

Acceptable property tenure: Feuhold, Freehold, Leasehold and Sub-Leasehold.

Term

Minimum term is 3 years

Residential - Maximum term of 35 years (30 years for an interest only loan of more than £500,000)

Buy to let - Maximum term of 35 years if the loan is more than £500,000

Unacceptable income types

The following forms of income are classed as unacceptable for a mortgage application:

• Bereavement allowance: paid to widows, widowers or surviving civil partners for a maximum of 52 weeks. Not acceptable as it's paid to reimburse personal expenditure.
• Employee benefit trusts (EBT): this is a tax mitigation scheme used in conjunction with employment income.
• Expenses: not acceptable as they're paid to reimburse personal expenditure.
• Housing Benefit: payment of full or partial contribution to claimant’s rent. The full rental figure i.e. rent amount without receipt of the benefit, must be listed in the applicant’s commitments. Housing benefit is not acceptable for mortgage products. This has been incorporated into Universal Credit.
• Income Support: payment for people on low incomes, working less than 16 hours a week and who have not signed on as unemployed. Can be accepted as a main allowance only if paid in conjunction with Disability Living Allowance. This has been incorporated into Universal Credit.
• Job Seeker's Allowance: paid to people who are unemployed or working 16 hours or less per week. This has been incorporated into Universal Credit (on a limited basis).
• Stipend: a form of salary paid for internship/apprenticeship. Only acceptable by exception, at the discretion of the underwriter, if they are comfortable with the evidence seen of the long-term nature of the income.
• Third Party Income: earned by a spouse, partner, parent who are not included on the application.
• Universal Credit: only certain elements of the Universal Credit are deemed acceptable as forms of income. Please see below for details.

The Standard Allowance element, which is the new term for Working Tax Credits (WTC), Job Seekers Allowance (JSA) and Income Support & Employment Support Allowance (ESA), can only be included where it can be evidenced from the award letter that the customer is employed i.e. the award letter details the take-home pay. This will confirm that the customer is in receipt of WTC/ESA and not unemployment benefits.

In addition:

Any housing element should be deducted from the overall figure and NOT included for mortgage affordability purposes. The customer must provide a written breakdown of their Universal Credit via their award letter or online statement (must include full breakdown of award). The amount received depends on income. Circumstances are assessed each month and the amount paid may change. If the take-home pay shows as £0 on the award letter, Universal Credit cannot be used for mortgage purposes.

Valuations - Free Valuation Products

A free valuation is available for purchases where the lower of the purchase price or value is less than £2m.  Only the first standard valuation is fee free on selected products.

Where a free valuation applies, we will complete our own checks to make sure a property meets our lending criteria. This check is FOR THE BANKS USE ONLY. Your client will not be charged for this. It is important that your client reads the Know Your Property declaration and understands that the bank will not carry out a valuation or check the condition of the property and  they will not receive a report from this check.

We highly recommend that your client carries out their own checks to satisfy themselves of the property value and condition before completing the purchase. In doing this we recommend that they seek independent professional advice regarding property valuations and surveys. Failure to complete adequate checks may result in the amount of the mortgage exceeding the value of the property. This is known as “negative equity”.

Some options they should consider:

·         Legal and General Surveying Service  (LGSS) – We can arrange a free no obligation advice service from experts at LGSS who can give them guidance on what survey is suited to their needs, property type and location – to arrange this we need your consent to pass their contact details to LGSS. In the Mortgage Application Form you will be asked “does your client want to be contacted by LGSS”. If you answer ‘ yes’ and provide your clients contact details,  LGSS will contact them to discuss a  specialist survey and collect the appropriate fee

·         RICS – Visit the Royal Institute of Chartered Surveyors website for guidance on selecting a survey https://www.rics.org/uk/

·         Solicitor – Speak to their solicitor and ask for advice on what checks they should complete

If a client chooses to upgrade from a free valuation on a purchase, we won’t refund the homebuyers or building survey fee if the case is then declined, as it has been paid to L&G directly.

Please note. For free valuation product cases a Homebuyers / Building Survey can no longer be instructed by you at point of sale. Should your client wish to instruct one via NatWest they should follow the guidance under point one above (LGSS).

Valuation Challenges

Valuation challenges will now only be accepted if it meets one of the following criteria:

1)      Factual error on the valuation instruction.

2)      The property is a New Build and there are relevant recent comparables on the same site.

*A Valuation Challenge Form is only required when challenging a New Build Property. Where a Factual error has been made, please contact us via one of the existing recognised routes.*

Valuation instruction

A valuation will be automatically instructed within 24 working hours of an application being submitted for residential and buy-to-let purchase mortgage and remortgage applications for loans of £499,999 or less.  We will provide customers with a full refund if their applications are declined on the grounds of affordability or credit scoring or where we cannot lend the full amount requested due to affordability issues.

For loans of £500,000 and above our processing team will contact you prior to the valuation instruction and we adhere to the following process:

·         Purchases – where the valuation fee is applicable, the customer is given the choice between whether the valuation is instructed on Day 2 at the clients own risk following receipt of application or wait until the case is fully agreed by an underwriter (Please note that if the customer does proceed and the valuation is instructed at clients own risk, they could lose the fee if the valuation is carried out but they withdraw.)

·         Purchases – Free valuation products instructed on Day 2 (bank is covering cost)

·         Remortgage – Instructed on Day 2

A valuation will always be obtained via a Panel Surveyor instructed by us.

The applicant may need to pay for a valuation report. Where a fee is payable, it is based on the purchase price, or estimated value of the property. 

Where a valuation fee applies, the applicant will also be charged a valuation administration fee of £75, as outlined on the Mortgage Illustration.

Remortgage applications - the fees-assisted package applies to loans of up to £2 million.  This includes a free valuation regardless of the loan amount and legals for loans of up to and including £2million for a standard remortgage.  There may be instances where a customer may not qualify for this.  Please refer to LiveTALK or your BDM. 

Valuation Fees

A valuation will always be obtained using a panel surveyor instructed by us (NatWest Group). The customer may need to pay for a valuation report or a more detailed survey. This fee is based on the purchase price, or estimated value of the property. The following tables give a guide (fees are applicable from 16 Jan 2015).

Where a valuation fee applies, the customer will also be charged a valuation admin fee of £75 as outlined on the Mortgage Illustration.

Adding fees to the loan

Product fees are the only fees which can be added to the advance.

Product fee

This fee is paid when the mortgage is arranged and is refundable until completion. 

Once your client's mortgage is set up, they may need to pay one-off fees for other services. These include changing the date of direct debit collection, duplicate statements, adding or removing someone from their title deeds.

If you'd like a copy of the individual fees and charges leaflet, contact us.

Working abroad

Previously, we required applicants to be employed full-time by a multinational company and we needed to understand where their company’s head office was based. This no longer applies. 

Self employed income can be considered where their company is based in the UK and the Republic of Ireland (including Partnerships/Directorships).

Assuming all other criteria is met, it is not a requirement that the applicant pays their income tax in the UK.

The currencies we accept are: Great British Pound, Euro, Australian Dollar, Bulgarian Lev, Canadian Dollar, Croatian Kuna, Czech Koruna, Danish Krone, Hungarian Forint, Japanese Yen, New Zealand Dollar, Norwegian Krone, Polish Zloty, Romanian Leu, Singapore Dollar, Swedish Krona, Swiss Franc and United States Dollar.

Acceptable - We may consider applications from people who:

• work away for a number of weeks at a time but return to the UK when they are not working
• work away during the normal working week and return to the UK at weekends 

This will always be subject to an underwriter’s discretion.

Not acceptable - We will not consider applications from people who:

• work abroad and only return to the UK for holidays
• are on secondments living permanently abroad for a short period
• have bought a property abroad to live in

We can accept up to 100% of Working Tax Credits, Child Tax Credits and Child Benefit. Please note that if your customer is heavily reliant on these benefits (the ratio of benefits to main income) then please discuss this with your BDM and be aware that the final decision remains with the underwriter. The age of an applicant's children may be a factor so we recommend sending in the awards letter with the application packaging. If the applicant earns more than £50,000, we will not include Child Benefit.