Income Criteria

How much can my client borrow?

Maximum borrowing is based on individual affordability, up to a maximum of 4.75 times gross income. We take a range of factors into account to determine how much an applicant can borrow. A minimum affordable term will be returned based on the loan amount requested by the customer. Our calculation aims to ensure each customer has a sufficient proportion of their income remaining, after taking account of their mortgage repayments, to cover their additional outgoings, including, on a generic basis, household and lifestyle costs.

Affordability calculator

This will allow you to check how much we might lend your client without having to undertake a full Decision in Principle which will involve credit scoring your client.

Go to affordability calculator

Sources of Acceptable Income

Acceptable Income

Proofs Required
INCOME FROM EMPLOYMENT
Basic Pay Latest payslip
Car Allowance, Location Allowance, Mortgage Subsidies, Shift Allowance, Teaching & Responsibility Payment (TLR) 1 & 2, Value account, Pension Benefit Fund Latest payslip
Bonus, Overtime, and Commission. (Important note to intermediaries - please note you must manually average the figures across the proofs provided and these must be keyed accurately) Weekly - latest 8 payslips
  • use the average of the 8 payslips and key as weekly
Fortnightly - Last 6 consecutive fortnightly payslips
  • add the value of the bonus, overtime or commission, divide by 12 and key as Weekly
4 Weekly or Monthly - latest 3 payslips
  • add the value of the bonus, overtime or commission, divide by 3 and key as Monthly
Quarterly Bonus & Commission - last 3 consecutive quarterly payslips or award letters/statements from the current employer that show payment (the oldest cannot be more than 12 months old)
  • add the value of the bonus or commission, divide by 3 and key as Quarterly
Half yearly – Last 4 consecutive half yearly payslips or award letters/statements from the current employer showing payment (the oldest cannot be more than 35 months old and both must show receipt of a Bonus or Commission for this to be acceptable)
  • add the value of the bonus or commission, divide by 2 and key as Annual
Annual Bonus & Commission - last 2 consecutive annual payslips or award letters/statements from the current employer showing payment (the oldest cannot be more than 35 months old and both must show receipt of a Bonus or Commission for this to be acceptable)
  • add the value of the bonus or commission, divide by 2 and key as Annual
Note: Employer's references will only be requested if your client is working on a temporary basis via an agency.
INCOME FROM SELF EMPLOYMENT
For Self Employed applicants you'll need to provide income figures for each of the last two years.

Sole trader/partnerships -
Applicant's share of net profit

  • For loans of up to £500,000, accountant's certificate covering at least the last two years (for Sole traders confirmation of two years income from HMRC Tax Assessment forms is also an option - (click here for more information).
  • For loans above £500,000, accountant's certificate covering at least the last two years and two years accounts. See below for more information.
Director's salary
  • For loans of up to £500,000, accountant's certificate covering at least the last two years.
  • For loans above £500,000, accountant's certificate covering at least the last two years and two years accounts. See below for more information.
Director's dividends
  • For loans of up to £500,000, accountant's certificate covering at least the last two years.
  • For loans above £500,000, accountant's certificate covering at least the last two years and two years accounts.
  • See below for more information

Please note: Accounts must be Final Accounts (drafts and projections are not acceptable) and the end of the latest financial period must not be more than 18 months ago. If the last accounting period is greater than 12 months, the income figures will be annualised.

INCOME FROM SECOND JOBS

Employed Applicants

Income from a second job, including bonus, overtime and commission, if your client has held this job for at least six months. Refer to above section for income proofs required.

Self Employed Applicants

Refer to self employment criteria and also the proofs section above.

INCOME FROM OTHER SOURCES

State retirement pension (SRP)*

Latest annual statement of pension / due on retirement.

Pension Credits*

Latest Pension Credit Award Notice

Private Pension
  • Latest Annual statement of pension / due on retirement or
  • Latest payslip from pension provider or
  • Latest Letter from pension provider confirming pension due on retirement
*also see Lending into Retirement section below
Investment income

Documentary evidence of value and nature of investment income i.e. Solicitor/Accountant/Trust Administrator letters. Only income of a guaranteed amount, which will continue for the forseeable future is acceptable.

Dividend income from a Portfolio of shares

Accountant's certificate

Dividend income from an applicant that owns a share in a business Accountant's certificate
Income from a company the applicant owns that will continue to provide an income into retirement Accountant's certificate
Rental income from a mortgage free property (see below for criteria regarding rental properties with a mortgage) Latest 3 months bank statements showing receipt of 3 months rental income. Rental income must be paid by Direct Debit/Standing Order.
Rental income from short term or holiday lets, "rent a room" lodgers or foreign property is unacceptable.
Rental income from a letting business Treated as Self Employed income, the last 2 years income figures are required. This is confirmed via an Accountant's certificate covering the applicant's share of net profit over the last 2 years, or the last 2 years HMRC tax assessments.
Maintenance**

  • A copy of the maintenance agreement, received under a Court Order, a CSA assessment or a written private agreement drawn up between the separating parties and
  • Six months bank statements as evidence of payment.

Note: we will not accept payments that have not been received satisfactorily for at least six months (and at the current level for three months).

Parental leave For applicants who are on or due to go on parental leave, the existing and future child care costs should be included as an outgoing, and the future number of dependants declared.

Employed Applicants

  • Already on parental leave: a copy of the letter from their employer confirming the terms of their parental leave, or the return to work letter.
  • Parental leave not yet started: If client has advised that their income is not changing, provide their latest payslip.

Self Employed Applicants

Refer to self employed income proofs above

Foster Income Treat as Self Employed
  • A letter from the Foster Agency confirming the total income paid for each of the last 2 years and that the most recent year's figure is likely to continue at the same level for the forseeable future.
  • The children in foster care of the applicants must be keyed as dependents

BENEFIT INCOME**

The following benefits are accepted, and must be keyed in the relevant fields under Other Income. Benefits must be likely to be paid for the forseeable future, at their current level or higher and must not be used as income if the client, or proof provided, confirms the payment is about to stop.

Child Benefit
(accepted provided neither applicant's total income is greater than £50,000)

Latest award notice (all pages), or
Latest bank statement showing credit of Child Benefit
Working and / or Child Tax Credits Most recent "Full" or "Amended" award notice for the current tax year (all pages).
Only accepted if all named on the mortgage are the same as all named on the award notice.
Income used is the lowest figure for each kind of tax credit.
Benefits Specifically for the Disabled The following benefits paid because of a disability are an acceptable source of income provided the applicant can provide their current award letter:
  • Incapacity benefit
  • Employment & Support Allowance (ESA - Support Group only
  • Disability living allowance (DLA) for a person aged 16 or over
  • Disablement living allowance on behalf of a child under 16
  • Attendance allowance
  • Personal Independence Payment (PIP)
  • Industrial Injuries Disablement Benefit
  • War Disablement Pension
  • Armed Forces Compensation Scheme

For both PIP and DLA the confirmation of the claim from the Department for Works and Pensions (DWP) must show that it has at least 5 years remaining or is ongoing. If there are less than 5 years left then the income cannot be used.

**Applications where income is made up primarily of benefits and maintenance are likely to be declined.

UNACCEPTABLE INCOME
  • Educational grants/bursaries
  • Teaching & Learning Responsibility 3 (TLR) payments
  • Housing Benefit
  • Jobseeker's Allowance
  • Income Support
  • Income from lodgers
  • Third jobs
  • Income from casual employment
  • Bereavement Allowance
  • Guardians Allowance
  • ESA payments not from the support group

Lending into Retirement

The retirement age of an applicant will be based on the lower of your client's stated retirement age, or the state pension age relevant to your client. The maximum retirement age is 70. The mortgage term must not extend beyond the 75th Birthday of the eldest applicant.

Where the mortgage term extends into retirement, the following criteria apply

Retirement is less than 10 years away

  • Details of both current income and anticipated retirement income must be provided
  • The lower of the current income or anticipated retirement income is used for affordability purposes

Retirement is 10 years or more away

  • Current income is used for affordability purposes
  • Evidence of pension contributions must be provided (i.e. pension deductions on your client's payslip, or payments to a pension provider evidenced via bank statements)

Clients with Additional Properties

Where your client will own more than one property on completion of their new loan with Nationwide the maximum LTV is 85%. Purchase applications for these clients should be keyed as a Second Property even if the property being purchased will be your client's main residence.

For information about products please see our products, loan size and maximum LTV criteria.If your client owns more than one property, we require all addresses and mortgage details.

We'll take into account the outstanding balance of any mortgages that are continuing, unless they are let and satisfy the following:

  • Let properties are treated as self-financing where the rent received is at least 125% of the current mortgage payments.
  • Where the rent received is less than 125% of the current mortgage payment, the difference will be included in the affordability calculation
  • Bank statements showing the last 3 months mortgage payments and rent receipts are required.
  • Rental must be paid by Direct Debit / Standing Order.
  • Each rental property owned by your client will be assessed individually, unless they are owned as part of a property letting business (see above Rental Income from a Letting Business).
  • We cannot use rental income from properties let abroad, however you should still key the mortgage details into the application where the mortgage is continuing (if the mortgage debt is in a foreign currency it should be converted to sterling).

There is no requirement to obtain past payment history proof for foreign currency mortgages but normal requirements apply to mortgages in sterling secured on properties abroad.

Outgoings

As well as taking into account your client's income for affordability, we'll also need to consider any regular outgoings they are committed to. These include

Credit Commitments:

  • Outstanding credit card balances, including score cards, mail order and budget accounts
  • Outstanding mortgage balances, including mortgages held abroad (see Clients with Additional Properties above for details of when mortgages are treated as self financing)
  • Monthly payments for personal loans and hire purchases with more than 6 months to run
  • Deferred purchase agreements with more than 6 months to run, including current or future payments

Non-Credit Commitments (monthly outgoings)

  • Child care
  • School fees
  • CSA / Maintenance
  • Additional cost for financial independants
  • Student loans
  • Regular travel costs - to include for example:
    • Season ticket loan deductions
    • Rail/Bus company deductions that the customer confirms will be regular
    • Regular car costs e.g. petrol, car tax, parking fees
  • Any other regular expenditure your client would like us to take into account when assessing affordability.

Non-Credit Commitments (annual outgoings)

  • Council Tax
  • Ground rent
  • Service charges
  • Buildings insurance
  • Shared ownership rent

For joint applications, if the outgoings are shared between your clients, you should key half the amount against each applicant.