A- Z Lending Criteria

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

The maximum number of applicants is two.

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. 

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.

• 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 - Unacceptable purposes

• Any gambling purchase.
• Any form of business purpose (i.e. start up for a new business)
• We will not offer the customer any form of Unsecured Debt Consolidation

Please note that Ltd Co BTL purchases are allowable under capital raising 

Buy-to-let (affordability)

Please click on the link below to use our two new simplified indication calculators, one for ‘Small Landlords and Like-for-like Remortgages’, the other for ‘Portfolio Landlords and First-Time Buyer Buy to Lets’.

Buy to Let Calculators

Please note that we have removed the top-slicing ability for Small Landlords and Like-for-Like remortgages. Income will still be used towards Portfolio Landlord and First-Time Buyer applications.

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

Small Landlords and like for like remortgages

Small landlords definition:

Those with three or less buy-to-let or consent-to-let mortgaged properties on completion of this application, excluding limited company buy-to-lets or unencumbered properties

Eligibility and Application Types:

Must own and reside in their own UK home on completion of the BTL application (unless they are living in tied accommodation due to employment e.g. armed forces, boarding school teacher, vicar/minister, estate worker

Small Landlord Applications: Purchase, Remortgage Like-for-Like and Remortgage with additional borrowing applications.

Portfolio Landlord Applications: Remortgage Like-for-Like ONLY 

ICR Calculations

Purchase and Remortgage Additional Borrowing:

Basic Rate Tax payer:          125% @ 5.5% (4.5% for 5 year product)

Higher Rate Tax payer:        145% @ 5.5% (4.5% for 5 year product)

*letting agents costs will be deducted from rental income for assessment (this will be requested on the calculator)

Remortgage Like-for-Like:

Basic Rate Tax payer:          125% @ 4.5% (on all products)

Higher Rate Tax payer:        135% @ 4.5% (on all products)

**The following below criteria only applies to Small Landlords and Like-for-Like Remortgages.

Max Age 80

No Income evidence required on submission:

No Income evidenced required on submission of application. May be requested by underwriting, if required.

No max Loan-to-Income (LTI):

With lending based on Rental income only, LTI limits have been removed.

Portfolio Landlord, Non Owner Occupiers and First Time Buyer Buy to Lets

Portfolio Landlord definition:

Those with four or more buy-to-let or consent-to-let mortgaged properties on completion of this application, excluding limited company buy-to-lets

Eligibility and Application Types:

Portfolio Landlord Application: Purchase and Remortgage with Additional Borrowing

First-time buyer First-time Landlord / Non-owner Occupier Applications: Purchase and Remortgage with additional borrowing (Small or Portfolio Landlords)

We are unable to consider rental income for non-owner occupiers.  Applications from non-owner occupiers whose only income is from rental properties (including Portfolio Landlords), won't pass our BTL affordability calculator.

ICR Calculations

135% @ 5.5% (4.5% for 5 year products)

ICR is applied across portfolio

Please note the clients income will also be used towards affordability, supplementing the total available lend, and factoring in commitments and residential mortgages.

**The following below criteria only applies to Portfolio Landlords & First-Time Buyer BTLs.

Max Age 80 – But not lending into retirement

Income Proof required:

Income evidence will be required on submission as part of standard packaging requirements.

Income used towards affordability calculation:

Clients income will also be used towards affordability, supplementing the total available lend, and factoring in commitments and residential mortgages.

Max Loan-To-Income (LTI) - 4.99x income (including rental):

LTI of 4.99x income, including rental income, per property.

Interest Coverage Ratio (ICR):

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.

Please note that we are unable to lend into retirement for portfolio landlords or first time purchaser/first time landlords

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
• 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.

Definition of a Non Owner Occupier/First Time Buyer:

For Buy to Let lending,  Non-Owner Occupier / First Time-Buyer is classified as:

A customer who is buying a property for the first time or who doesn't own and reside in their own UK home on completion of the BTL application, which means:

o   They are buying a property for the first time

o   They have owned a UK residential property in the past but they don’t now

o   They own a UK residential property now but will not reside in it at completion (unless they are living in tied accommodation due to employment e.g. armed forces, boarding school teacher, vicar/minister, estate worker)

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.
• When using net pay and the childcare costs are deducted from source (buy to let applications must use gross and therefore captured in all situations)
• Where the customer benefits from free childcare hours
• Where a customer is proactively using a childcare provider as a developmental experience and the costs are discretionary

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.

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

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.

The below guidance relates to day rate 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 at least £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

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 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

Where a day rate contractor has switched/is switching to either a Fixed Short Term contract (as employee on PAYE) or to be paid via an Umbrella Company, then we will still seek to assist on such cases provided that our existing high income day rate contractor criteria is met, as follows:

The contractors minimum annual income is £75,000 – we will 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

In addition to this:

For Fixed Short Term Contracts (as employee on PAYE), please include the most recent 4 weekly pay slips and a copy of the contract.  If the contract is yet to start please provide a copy of the contract.  If the applicant does not yet have 4 weekly pay slips then a copy of the contract along with any pay slips received so far should be provided.

For Umbrella Company Contracts, please include the most recent 4 weekly pay slips and a copy of the contract.  If the contract is yet to start then a copy of the contract will be required and we also need to know the amount to be levied by the Umbrella Company for use of their services – this figure will need to be deducted from the customer’s income.  If this is not clear, we may not be able to assess the application until we see sight of the first pay slip.   If the applicant does not yet have 4 weekly pay slips then a copy of the contract along with any pay slips received so far should be provided. 

When a contractor has reverted to Fixed Short Term contracts (as employee on PAYE) or Umbrella Company contracts, we still wish the cases to be submitted as ‘self-employed’.  This is our risk appetite, given the complex nature of these arrangements and the contractors most recent contracting history.

For any cases that do not fit under the above criteria then our standard PAYE contract worker policy will be applicable

Please also refer to the below frequently asked questions for further guidance:

FAQs

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.

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.

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.

• In what instances will we require an EWS1 Form?

We rely upon the professional opinion of our valuers to confirm if a property shows the presence of potentially combustible cladding or if there are other fire safety concerns. Should they feel this is the case, they may request an EWS1 form. Where no signs of cladding are present and there are no other concerns, the valuation will proceed without the need of an EWS1 form.

The RICS Press Release relating to the most recent EWS1 Guidance Note, issued in March 2021, can be viewed by using the following link:

https://www.rics.org/uk/news-insight/latest-news/press/press-releases/rics-makes-move-to-unlock-market-for-flat-owners/

To view a copy of an EWS1 form please use the following link

https://www.rics.org/globalassets/rics-website/media/news/news--opinion/fire-safety/ews1-form-5.3.21_final_clean2.pdf

You should also ensure the following requirements are  met:

Covering Letter

A covering letter must accompany the EWS1 form provided and include the following as a minimum; confirmation that the form completed for the building name and postcode has been provided by the signatory, the rating that has been provided and the relevant body the signatory is associated with and the qualifications they hold.

Professional Body for B Rating

EWS1 forms with a B rating must be completed by someone who is registered as a Chartered Engineer and who is a fellow/member of the Institution of Fire Engineers.

Postcode Match with Property Valuation

The postcode must match the one provided for the subject property on instruction/confirmed on the valuation report. If there are multiple postcodes for one building, all postcodes must be included.

Full EWS1 Form must be Provided

The EWS1 form is a 4-page document and should not be altered. The pages including the notes section and flow chart must always be included. Amended versions or forms that have been incorporated in to another document are not acceptable.

Building Name Confirmation

The building name provided on the EWS1 form and covering letter must match the building name on the address provided on  valuation instruction and the valuation report.

Please see Forms and Guides for further information in relation to these forms.

EWS1 Guidance

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

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')

For all customer applications that do not have permanent “right to reside”, the maximum LTV is restricted to 70% on a Capital & Interest repayment basis only.

If the applicant is a non-British or Non-EU national – we will ALWAYS need a copy of a passport & valid Visa at time of application. We cannot process a joint application where one customer has indefinite leave to remain and the other has a visa which has less than 6 months remaining.

For joint applications, where only one party has permanent right to reside, we can consider up to 95% 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. As part of our packaging requirements, the EU settlement status letter will need to be provided
• 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.

• 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

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.
• We cannot lend if the applicant isn’t a UK National or doesn’t have permanent right to reside

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.

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 sale of main residential property is the Repayment Strategy (RS) the following applies:

• 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.
• The main residential property cannot be used as the RS for a second home that the applicant does not reside in.

• 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).

For more information on our Interest Only proposition, please utilise our Interest Only Guide.

Interest Only Guide

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.

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.

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

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.

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. 

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

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.

NatWest Intermediary Solutions has a range of  Mortgage Guarantee Scheme products for Intermediaries. The new scheme allows first time buyers and those wanting to move home a chance to do so, using just a 5% deposit.

The new Mortgage Guarantee scheme offers both 2 and 5 year fixed rates at 95% LTV. The maximum purchase price of the properties will be £600,000 and cannot be repaid on an Interest only basis.

For the mortgage to be eligible for the new scheme, it will need to:

• be a residential mortgage, not a second home and not buy-to-let
• not be a new build property – which is any property built, first occupied in its current state, or significantly modernised, refurbished or altered within the last 2 years.
• be taken out by an individual or individuals rather than an incorporated company
• have a loan-to-value of between 90 per cent and 95 per cent
• pass NatWest standard risk assessments e.g. affordability and credit checks

None of the applicants may own or have any interest in any other property either in the UK or overseas and the property being purchased must be their sole residence.

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.                                                    

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.

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.

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

If you have any questions regarding the Product Transfer process for former Metro Bank customers, please review these FAQs

• 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 90%. 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.

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

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

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 (or retirement age, if that precedes this) and the maximum term is 35 years.

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

Portfolio Landlord/First Time buyer:

• We will not allow any new application to go past the customer’s retirement age

Small Landlord/Remo Like for Like:

• The application can go past the customer’s retirement age
• The application is based on ICR rather than personal income, therefore no evidence of pension or retirement income is required regardless of how far away retirement is

The max age for all applications is 80

(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 31st 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.

• Please refer to 'Income Requirements and Packaging' on our Self Employed Hub
• Self Employed Hub
• Please also consult our Self Employed guidance on our Packaging Guide
• Packaging Guide

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.

We do not lend against Shared Ownership properties where the customer does not own 100% of the property or will not own 100% of the property on completion of the mortgage. 

We have a panel of solicitors for our fees assisted remortgage service. There is no charge to the customer for a standard remortgage loan below £2 million.  All of our panel commit to charging the same scale of fees for any additional services which a customer may require. Please refer to our list of these fees for England & Wales and Scotland.

A standard variable rate  (SVR) is a type of variable-rate mortgage. The SVR is a lender's default rate without any limited-term deals or discounts attached. A lender can raise or lower its SVR at any time. Standard variable rates tend to be influenced by changes in the level of the Bank of England's base rate. However, a lender may also decide to change its SVR while the base rate remains unchanged.

Repayment of student loans is dependent on receipt of a minimum income. They need only be included as a financial commitment to be taken into account for mortgage affordability if the applicant is already making repayments.  

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.

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.

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

For any properties valued over £10m, valuations are available, upon request via LGSS.

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.

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.