Big changes to Nationwide Interest-Only Mortgage and Nationwide Foreign National Mortgage criteria announced
In a message to mortgage advisors this morning, Nationwide Building Society has announced a series of updates to its lending criteria. These new changes directly impact Nationwide Foreign National Mortgages and Nationwide Interest Only Mortgage products. Historically both tricky mortgages to arrange…if you don’t have the right help and guidance from a knowledgeable and experienced mortgage advisor. In this article, I will run through the various criteria changes and give some insights into how these changes will positively impact the UK mortgage market.
Changes to Nationwide Interest-Only Mortgage Criteria
The first change is a pretty big one! Nationwide has raised the maximum Loan to Value (LTV) for interest-only mortgages, giving potential borrowers more flexibility. Under the updated criteria, the maximum LTV for interest-only mortgages is now set at 75%. Meaning that borrowers who qualify for an interest only mortgage can potentially put down as little as 25% deposit or have as little as 25% equity in their current home for a remortgage (subject to minimum equity criteria). This change is good news for borrowers looking for a more affordable way to buy or remortgage a property.
Additionally, the lender has introduced clearer minimum income and equity requirements for interest-only mortgages:
- Minimum income: £75,000 for sole applicants and £100,000 for joint applicants.
- Minimum equity varies by region, with specific amounts set for different areas in the UK:
- £300,000 for Greater London and Outer Metropolitan areas.
- £250,000 for the Outer South East.
- £200,000 for all other regions.
Other key points in the updated criteria include:
- Maximum term: 25 years (or retirement age, whichever comes first).
- Repayment strategy: The sale of the main residence must be the strategy for repaying the mortgage.
- Eligible properties: Interest-only mortgages are available only for properties that will serve as the applicant’s main residence, and first-time buyers are not eligible.
So what could this mean for the UK mortgage industry? Well…frankly this is a significant move by Nationwide in my eyes. It makes interest-only mortgages more accessible, and for Oportfolio, it means that many of our clients who previously didn’t meet interest-only criteria but would better benefit from one, can now get one! Although, it’s important to note that applicants must meet all eligibility criteria before approval.
Updates for Nationwide Foreign National Mortgages
Nationwide has also interestingly improved its mortgage offering for foreign nationals, recognising the increasing need for flexible mortgage options for people residing in the UK. The key change is that foreign nationals without indefinite leave to remain can now access an LTV of up to 85%, an increase from the previous 75% limit. To qualify for this higher LTV, applicants must meet specific income requirements:
- Sole applicants: A minimum income of £50,000.
- Joint applicants: A combined income of £75,000.
If applicants do not meet these income criteria, the LTV will revert to 75%.
Nationwide’s updated foreign national mortgage criteria also make it easier for applicants with a range of residency statuses to apply:
- Applicants with EU Settlement Scheme (EUSS) pre-settled or settled status will be treated as having indefinite leave to remain.
- Republic of Ireland (ROI) nationals will be treated as UK nationals with no restrictions on time limits.
- Non-UK/Non-ROI nationals without indefinite leave to remain will need to prove at least 12 months remaining on their visa when submitting their application.
Finally, Nationwide also has removed the requirement for foreign national applicants to provide a 25% deposit from their own resources, which was previously a barrier for many.
What This Means for Foreign Nationals and Interest-Only Borrowers
These changes from Nationwide really represent a positive shift for people looking for greater mortgage flexibility, whether they are first-time buyers, remortgaging, or seeking interest-only options. The criteria changes make it easier for foreign nationals and those seeking interest-only mortgages to meet Nationwide’s criteria, enabling more people to secure the financing they need for homeownership in the UK. The mortgage market is changing and financing property is becoming more difficult generally, so any changes like these that ease the eligibility criteria are only a plus in my eyes.
Are You Interested in a Nationwide Interest-Only Mortgage or Foreign National Mortgage?
If you are considering applying for an interest-only mortgage then please get in touch with our expert advisors at Oportfolio Mortgages. We can help you through the mortgage process every step of the way and ensure you get the right deal based on your circumstances. Contact us today to get started on your mortgage journey.
