07 August 2017
NatWest have introduced some changes to the way they assess mortgage applications from self-employed contractors earning more than £75,000 a year. Here’s a summary of the way they assess their income, as well as the income proofs they require from them, with the changes highlighted in bold.
They calculate their income as their average weekly contract income multiplied by 46, provided they can confirm evidence of:
- their latest 3 months’ consecutive personal bank statements for their main account (not required if their main account is with NatWest or RBS)
- where significant business expenses are identified on the application, 3 months’ consecutive bank statements (personal or business) detailing these
- a copy of contract(s) to encompass a 12-month period, with a minimum of 6 months’ contract(s) already completed immediately preceding the date of application.
- they have taken no more than a six week break between contracts in the 12-month period
- the tax position is paid and up to date.
There is some additional information that you need to be aware of when submitting an application for a customer who meets these criteria:
- Key as self-employed. When using their web site or the MTE to submit an application, you must key the applicant as ‘Self-employed’ NOT ‘Employed’.
- Operating via a limited company. The applicant(s) must meet one of the following circumstances:
- Single applicant owning 100% of the company
- Joint application where one applicant owns 100% of the company
- Joint application where the company is jointly owned
- Joint application where one applicant owns 100% of the company and the other applicant is employed by the company (in this instance the employed applicant’s income should be excluded to avoid double-counting).
- Significant business expenses not reimbursed as part of an applicant’s contract. Significant business expenses as detailed below, must be fully understood, evidenced and accounted for in the affordability calculation. Significant business expenses may be, though not limited to:
- Car/finance loans
- Extended travel and accommodation costs
- Training courses
- Professional indemnity insurance
- Partner/spouse/employee salaries
- Umbrella arrangements. They cannot use the high earning contractors’ criteria to consider applications from customers using an umbrella company arrangement. Under these circumstances they would consider an application under their standard self-employed policy.