"Nationwide strikes again with another clever enhancement to their affordability calculations"

Homeowners who are looking for a new mortgage deal may benefit from enhanced affordability when applying to remortgage to Nationwide, the lender announced today — a move welcomed by brokers across the board.

Nationwide will now apply a different affordability calculation when eligible applicants take out a five or 10-year fixed rate product, which may enable them to borrow more.

The enhanced criteria will be available for both employed and self-employed applicants. Sole applicants will need a minimum income of £40,000 and joint applicants a minimum of £70,000 to benefit from this enhanced affordability check.

All applications will continue to be subject to a robust affordability assessment to ensure Nationwide continues to lend responsibly. This change provides higher affordability for eligible customers who’ll have a track record of mortgage payments and greater payment security through a rate fixed for at least five years.

In addition to the new enhanced affordability, those looking to remortgage but who don’t require any additional borrowing will continue to be able to borrow up to 6.5x income, up to 95 per cent Loan-to-Value. 

Henry Jordan, Nationwide’s Director of Home, said: “The ability to borrow enough can be a barrier when people look to remortgage, even when they can demonstrate a clean payment history. We’re pleased to be able to help them by making this change, which should put Nationwide front of mind for those wanting a new mortgage deal.

“With our Helping Hand for first-time buyers as well as the enhanced affordability for home movers and now for those looking to remortgage, we are demonstrating that the country’s second largest lender remains committed to supporting all borrowers across the mortgage market.”

Hannah Bashford, Director at Leatherhead-based Model Financial Solutions enthused: “This is fantastic news for remortgage customers. A lot of emphasis has been given to buyers to stimulate the housing market but there is still a huge amount of people remortgaging who need to be supported so this move by nationwide is welcome. Opening up affordability to this type of borrower will give them more options and mean they don’t get caught as a mortgage prisoner."

Dariusz Karpowicz, Director at Doncaster-based Albion Financial Advice, also welcomed the news: “Nationwide strikes again with another clever enhancement to their affordability calculations. This proves they're serious about helping remortgage borrowers escape the product transfer trap. This latest move builds on their already generous lending criteria, offering borrowers who've proven they can handle mortgage payments a chance to access better deals rather than being stuck with their current lender.

"The beauty of this approach is its  common sense. If you're already managing your mortgage payments successfully, why shouldn't enhanced affordability reflect that track record? With minimum income thresholds of £40k for sole applicants and £70k for joint applications, Nationwide is targeting borrowers who genuinely need this flexibility whilst maintaining responsible lending standards.”

Justin Moy, Managing Director at Chelmsford-based EHF Mortgages, said the self-employed will be pleased: “This is a great move by Nationwide to give those remortgaging a similar opportunity to first-time buyers with enhanced affordability, including the normally shunned self-employed borrowers. By using a longer term fixed deal, lenders know that payments should be affordable over the long term, allowing many to achieve that little bit extra on their mortgage renewal.”

Craig Fish, Director at London-based Lodestone, was also upbeat: “It's great to see more lenders offering improved affordability solutions to clients. We all know that loyalty, from a lender perspective, is mostly dead when it comes to mortgage options as many clients can get better rates by changing lenders. Affordability being tight is the biggest reason that many feel they have no other option and hence why most lenders don't offer favourable rates to their existing borrowers. Moves like this open the market up and create more competition in an area that hasn't had many choices of late. Kudos to Nationwide and let's hope more lenders follow suit.”

Meanwhile, Aaron Strutt, Product and Communications Director at London-based Trinity Financial, said: “The changes to mortgage affordability rules and more generous loan sizes just keep coming. Many borrowers are currently forced to stick with their existing lender and complete a product transfer because they don't meet the new affordability calculations of the other lenders. Technically, they are saying they can't afford their mortgage. Hopefully this will help to get the remortgage market moving. Nationwide already has some pretty generous remortgage calculations, but they have just been made better.”