Updated guidelines from NatWest and Nationwide
If a borrower’s employed income has changed permanently or temporarily and they are on the government’s coronavirus job retention scheme, NatWest will base its affordability assessment on the new revised income. Brokers will need to obtain evidence of their client’s new earnings.
If the borrower is a furloughed worker brokers must submit a letter from their client’s employer to confirm their status and what their income will be.
A furloughed worker is an employee who has been asked to stop working but remains on the payroll and is supported by the government’s wage package.
Under the government’s job retention scheme, employers will be given 80 per cent of furloughed employees’ wage costs up to £2,500 (£30,000 a year). The employer can choose to make up the difference between the payment and the employee’s salary but it is not compulsory.
Where any elements of a borrower’s income are reducing, including overtime, commission and bonuses the lower amounts will be used in the affordability assessment.
Any temporary increases, for example if the borrower’s hours have been extended, should not be relied on and discounted from the assessment.
Where sick pay shows on a borrower’s payslip, NatWest will allow brokers to continue with the application as long as the borrower’s current income meets the bank’s affordability criteria.
But if it is not clear how long sick pay will be paid for, brokers should speak to their business development manager (BDM) to discuss when the bank will be able to help the borrower.