The lender has also revealed that it will now include 3% of the equity share as an outgoing in the client’s affordability calculation.
Previously, Nationwide required that the equity loan have no interest charges for the first five years. That rule is still being maintained.
A spokesman for the building society said that the change has been made to ensure that borrowers are able to repay back the loan in the longer term, as previously interest on the equity loan was not taken into account in the affordability.
“We’re doing this to reflect a more prudent approach and the overall change will have a limited impact on the amount of money we will lend to people.”
The equity share loans will now need to be on a capital and repayment basis.
The spokesman added: “Our previous policy did allow interest-only applications but the number of these applicants was quite low.
“Again, this reflects a more prudent approach and will help applicants to buy out the equity loan in the future.”
