Introduction to Affordability Changes NatWest recently sent me an email on Thursday the 22nd August confirming there's been some affordability changes in their lending criteria now this could mean that some people can borrow more and some people can borrow less and what I'm going to show you today in this video is an actual affordability calculator I ran before these changes happened and I'm going to do one right now live on this video and show you what that person can borrow in the same scenario as of today so let's Dive Right Email from NatWest: Key Changes In so this is an email I received from NatWest the 22nd of August at 10:03 as you can see in the corner here and what it says is from the 22nd of August we'll Implement several changes to our affordability calculations as part of our annual review now this could mean more people can borrow more and some people can borrow less and it says these changes only apply to decision in principles or otherwise known as agreement principles and full mortgage applications submitted on or after the 22nd August what that first bit means is if you've submitted your agreement in principle and you for mortgage application has been submitted before the 22nd August the old lending policy applies anything after the 22nd August that has been submitted as an agreement and principle of for mortgage application been submitt the new policy will come into play so have a look at Pre-Change Affordability Calculation this this is an have a look at this is an affordability calculator I ran with Nat West themselves on the 7th of May 20124 at 5:07 p.m. so this is before the affordability changes have happened on the 22nd of August now according to this my clients could borrow anywhere from 469,000 if they were going for anywhere from 469,000 if they were going for a two or threee product up to 482 380 based on if they're going on a 5year product now just to show you the figures that we've inputed here we they're going for a 75% loan to value they needed a loan of 465 so clearly the loan was affordable to them they're really young so they could do a 30 34 year mortgage term joint applicants no kids so they're probably living the dream getting four nights rest right now unlike me and they've got an income of 75k for the first applicant and what nwest do is they average the latest two years bonus income so an average of her latest two years was 5752 Mister is on 18,600 per anom he doesn't get any additions and this from memory was for a car finance that they had which was £345 per month now as I showed you at the start they could borrow 469 500 to 482 300 basically now what I'm going to show Post-Change Affordability Calculation you is a real time affordability calculator withn West and it is the 23rd of August at time of recording it's 4:15 p.m. and I'm going to replicate exactly what I showed you on the first affordability calculator on the latest new affordability calculator with the changes with that West so what we're going to find out is does it make a difference on how much you can borrow so what I've got here is so what I've got here is I've got the original affordability calculator I just showed you and this is a real time affordability calculator I'm running as of today on the 23rd of August as I mentioned again so let's replicate the details exactly the same so just for but just to reconfirm the figures before in the old affordability calculator was 469 531 if the client was taking two or threeyear product and 482 380 if they're taking a 5year product the left see if these affordability changes make a difference to how much this client can borrow 465 34 year term as we mentioned joint applicant no kids living the dream for now anyway 75,000 then we've got the bonus of 5752 M 18600 and then you've got the car finance of 345 yeah and no at the bottom so let's go and see what this figure is and let's see if these affordability changes make a big difference wow look Comparing the Results at that so previously on a two or threee product they could borrow 469 500 now they can borrow 482 380 and on the 5year product they could borrow 482 380 and as of today it's still the same 48238 so you could see from that affordability calculator that I ran today that on a two a freee product the clients could borrow more compared to what they could borrow previously now lenders do this all the time the lending criteria lenders change when and whenever lenders change a lending criteria whenever they want so for you Conclusion and Advice to be up to date in terms of how much you can borrow with a mortgage lender you should seek professional advice so you should either be in direct contact with your bank on a regular basis or if you're using a broker stay in contact with them because a loan of 15,000 if you wanted to go for example on a 2 or threee fix and you can borrow 15,000 more that potentially could mean the difference between you getting the property that you want and what you previously could not get now remember emails like that only get sent to Brokers if you went direct to your bank you will not get those emails so you won't be notified if affordability criteria changes so for example you could flip reverse it and previously you could borrow more than what you could borrow now so if the amount you could borrow has reduced you're none the wiser you probably think you made an offer you go in bang and then what happens is they review your application and you can't borrow as much as what you for so this is why you need to keep up to date with the market up to date with lenders criteria because you don't want to be disappointed when it's your time to get on the property ladder you want to ensure you want to ensure that you can get the loan amount that you need to get that dream home I hope this video has helped and if it has make sure you tune in for the next one