The mortgage lender will now lend 6.5 times the income of applicants with higher incomes who borrow at 75% of their property value or less.
The move is part of a drive by NatWest to maximize people’s borrowing potential, and was described by one broker as “generous”.
Although it is aimed at high-income earners, there are other providers in the mortgage market that offer higher lending to lower-income borrowers.
As a standard most lenders offer loans worth four or 4.5 times income to customers. However, recently, thanks to the relaxation of rules, many of them have started offering more generous loans to movers and even first-time buyers through some schemes.
According to Aaron Strutt, director of products and communications at Trinity Financial, Nationwide offered to lend six times income, and HSBC offered 6.5 times, for example.
He believes NatWest will gain more business through today’s change, especially since many applicants just need slightly more generous loan sizes to buy the properties they want.
But he also warned borrowers considering this option to think carefully and seek advice first.
“NatWest has always been a relatively generous lender, but it has gone a step further to become one of the largest MSPs for high-income earners,” he said.
“This change in policy means they are more generous than almost all other banks and building societies.”
Strut added: “We know lenders are keen on business, but this income-extending mortgage is significant and borrowers will really need to think carefully before taking on such a large debt. Even if they earn £150,000.”
Meanwhile, Gaurav Shukla, CEO, said: Home Me Mortgages, based in Marlow“This will help a segment of the market, especially high-income professionals who struggle with affordability despite strong income,” he said, speaking to Newspage.
“For people with a household income of more than £150,000, going from 5x income to 6.5x income can be the difference between bargaining big or actually buying in areas where prices have outpaced wages.
“However, this alone will not ‘nudge Britain into action’. Affordability is still driven by prices, confidence and whether monthly payments are comfortable, not just maximum borrowing power.”
