Customers with Nationwide are set for a huge boost as the building society changes its mortgage rules in the UK. Those with the bank will now be able borrow a substantially higher amount when purchasing a new home, or remortgaging. This is due to Nationwide reducing its stress rates by up to 1.25%.
In recent weeks, a number of banks have eased their affordability calculations which is a welcome change for millions of Brits looking to get onto the property ladder. The reduction in rates now allows for a number of potential home owners to secure sufficient financing. The building society’s alteration to its calculations of mortgage affordability means hopefully applicants will be able to borrow around £28,000 more from today.
For those looking to remortgage, customers may be able to access up to a whopping £42,600 more than before.
Nationwide’s changes include both the lowering of its standard stress rate, as well as the rate applied to first-time buyers and those moving home on a fixed mortgage deal for a minimum of five years.
All borrowers are set to benefit from the new changes. For a first-time buyer earning £55,000 and using the building society’s Help Hand mortgage, their maximum borrowing increase will rise by £25,800 from ££304,200 to £330,000.
Someone looking to move home with a household income of £75,000 and is looking to take on a five or ten-year fixed mortgage will be able to borrow up to £336,800, which is a huge difference compared to the former limit of £307,000.
Remortgagers are set to see the highest gain with a borrowing allowance increase of £42,600, if they earn £45,000 annually.
Customers looking to borrow money are tested using stress rates which are hypothetical mortgage rates. Lenders essentially check whether applicants could afford monthly payments if rates increased.
Banks and building societies check to see if borrowers would be able to manage payments at rates a couple of percentage points above their current one.
Nationwide is one of a number of lenders to adjust the stress rates after the Financial Conduct Authority recently clarified the rule change. Lloyds Banking Group made similar changes last month, allowing for customers to borrow around £38,000, as well as HSBC and Santander making adjustments too.
