From 14 April and post MMR, the way we assess affordability will remain very much in line with our current approach, although there will be some small changes around lending into retirement and treatment of the mortgage term.
As with our previous MMR communications, these changes are about evolution and not revolution and they’ll fit naturally into our existing NFI Online and NFI MTE application process.
Lending into retirement
From 14 April, where the mortgage term requested by your client takes their lending into retirement:
- Our affordability assessment will be based on whether or not your client is within 10 years of retirement. Previously it was 5 years. If they’re within 10 years of retirement, we’ll require evidence of both current income and anticipated retirement income, the lower of the current income or anticipated retirement income is used for affordability purposes.
- If your client is more than 10 years from retirement, we’ll continue to use their current income for assessing affordability. But from 14 April we’ll also ask for evidence of provision for retirement income, for example, a pay slip showing that pension contributions are being made.
Retirement age is defined as state retirement age or the intended retirement age declared by your client, whichever is earlier.
- From 14 April, affordability will be assessed using the mortgage term selected by your client. Previously the term used was always 25 years (or to the age of 75, whichever was the shorter).
- And as well as giving you a maximum affordable amount, our Decision in Principle will provide you with a minimum term over which the requested loan can be repaid.
We're building these changes into our NFI affordability calculator
Our NFI affordability calculator will be updated to incorporate the changes above. So for example if your client is within 10 years of retirement you’ll need to enter their anticipated retirement income.
By keying this information up front, ensuring all of your clients outgoings have been entered in full, you can be confident our NFI affordability calculator will be consistent with our NFI Online and NFI MTE application systems.
On your Side with MMR
We’ve now communicated the key Nationwide MMR lending and criteria changes you need to be aware of. You’ll find adedicated MMR page on our website, which includes our two previous MMR communications on pipeline applications and responsible lending changes.
From 14 April you’ll see some positive enhancements to our application systems to help guide you through the post MMR application process, which we’ll cover in our final MMR communication shortly.