Following a review of the market, RBS has confirmed it will provide an affordability based calculator for its residential mortgage range.
Commenting on the change, David Jones, commercial director of RBS Intermediary Partners, said: “Having surveyed the market and engaged in conversations with our business partners it was felt that income multiples, while serving a purpose, have become outdated. Each case will now be taken on its own individual merits. The introduction of one affordability calculation to all residential mortgages, means that, at a stroke, we have simplified the process for intermediaries. It should now be quicker and more straightforward to work out how much a client can borrow for all residential brands. We believe that the affordability calculations will be welcomed by intermediaries.”
Alan Lakey, senior partner at Highclere Financial Services, said: “Everyone seems to be getting on the affordability bandwagon. It depends on how the system is used but it seems to be a good idea for borrowers. Some lenders are now lending more based on affordability, with affordability increasing the ability to borrow.”
However Lakey argued the use of affordability calculations might bring up the issue of clients lying to get a mortgage. He added: “The introduction of affordability calculations means that brokers and lenders are relying on borrowers to be truthful. If you have two people, both on the same income of say £30,000 but one smokes and gambles this is likely to affect his approach to affordability.”
