If a borrower’s employed income has changed permanently or temporarily and they are on the government’s coronavirus job retention scheme, NatWest will base its affordability assessment on the new revised income. Brokers will need to obtain evidence of their client’s new earnings.
If the borrower is a furloughed worker brokers must submit a letter from their client’s employer to confirm their status and what their income will be.
A furloughed worker is an employee who has been asked to stop working but remains on the payroll and is supported by the government’s wage package.
Under the government’s job retention scheme, employers will be given 80 per cent of furloughed employees’ wage costs up to £2,500 (£30,000 a year). The employer can choose to make up the difference between the payment and the employee’s salary but it is not compulsory.
Where any elements of a borrower’s income are reducing, including overtime, commission and bonuses the lower amounts will be used in the affordability assessment.
Any temporary increases, for example if the borrower’s hours have been extended, should not be relied on and discounted from the assessment.
Where sick pay shows on a borrower’s payslip, NatWest will allow brokers to continue with the application as long as the borrower’s current income meets the bank’s affordability criteria.
But if it is not clear how long sick pay will be paid for, brokers should speak to their business development manager (BDM) to discuss when the bank will be able to help the borrower.
Nationwide will not accept any bonus, commission or overtime payments for a borrower if they are being supported by the government’s job retention measures.
The society will use 80 per cent of the borrower’s income in the affordability assessment, up to the cap of £2,500. If their employee is making up all or part of the difference in their wages, brokers have been asked to contact their BDM.
For brokers with clients who have already passed an affordability assessment who have since been furloughed, they must call Nationwide to let them know of the change.
If the lower income means the borrower no longer fits the affordability assessment they can extend their term, reduce the loan amount or pause the application.
Full details of income changes and evidence required can be found on the lenders’ intermediary websites.