The mutual published the change, which applies to all cases that have their first decision in principle (DIP) on or after 13 August, in response to the closure of the government’s furlough support scheme.
However, this will also apply to pipeline borrowers who received a DIP before 13 August and suffer a negative change in income.
“With the government’s Coronavirus Job Retention scheme ending on 31 October 2020, we’ve reviewed our current policy and outlined what this means for your clients who have been furloughed,” it said.
“For cases that had their first DIP prior to 13 August 2020, if you are informed of a negative change to the applicant’s income (e.g. loss of job, reduction in income) then the changes detailed above will apply.
“This also applies to cases where an offer extension is requested, and negative income changes have been declared,” it added.
Return to work criteria
Where the applicant will be fully returning to work no later than 2 November and has a firm return to work (RTW) date, Nationwide will use up to 100 per cent of basic income, including income that is currently treated as basic.
Income cannot be used where the applicant does not have a firm RTW date, or their RTW date is after 2 November 2020.
An exception applies for furloughed applicants on or those about to go on parental leave.
Where the applicant’s return to work pay is higher and the higher income is needed to meet affordability, brokers should refer to their business development manager providing full details, including the amount and reason for the increase.
A RTW letter from the employer confirming the firm date the applicant will be fully returning to work is required.
This must be supported by either:
- confirmation the applicant’s terms and conditions of employment will remain unchanged as at 2 November 2020;
- or full details of where there will be a variation in the employment contract.
A Nationwide spokesman told Mortgage Solutions: “As the government’s Coronavirus Job Retention Scheme comes to a close at the end of October we must ensure, as a responsible lender, that members can afford their mortgage payments both now and in the future.
“That is why we are asking all mortgage applicants from 13 August to provide a letter from their employer outlining a firm return to work date.
“Once that has been confirmed, we’ll take up to 100 per cent of an applicant’s basic income into consideration.”
Call only if ‘absolutely necessary’
The Mortgage Works (TMW), Nationwide’s buy-to-let subsidiary, has also urged brokers to only call if the enquiry is “absolutely necessary”.
Many lenders are suffering from high demand at present due to the busy mortgage market prompted by the temporary stamp duty cut and by workforce restrictions due to coronavirus measures.
In a message to brokers the lender said: “We’re committed to providing the best possible service for you and your clients and encourage you to familiarise yourself with the following steps to help us improve our current service levels.
“Please don’t call… unless absolutely necessary. Our TMW contact centres are continuing to experience a high volume of calls so to save you time, please remember that most answers can be found online.”
It emphasised that for valuations, providing multiple contact points will give the best chance of arranging a valuation quickly.
For deposits, the lender does not accept loans as a source of deposit, including intercompany and Business Bounce Back Loans.
And for limited company business, brokers must ensure they have read the lender’s full limited company lending criteria before submitting applications.