£50,000 rule for RBS mortgage deal

Updated: 
RBSNew interest-only mortgages taken out by Royal Bank of Scotland (RBS) and NatWest customers will be restricted to people earning at least £50,000 under fresh rules.

The new requirements will help deal with market volatility and are part of RBS and its sister brand NatWest showing "responsible" lending by ensuring the mortgage is affordable to the consumer, the Royal Bank of Scotland group said.

The announcement follows general concerns of an interest-only mortgage "ticking time bomb" across the market, with worries previously raised that some borrowers currently on interest-only deals with lenders may find themselves unable to remortgage.

The group said the new rules are "in line" with recent changes across its competitors and it will retain the current loan-to-value (LTV) mortgage lending rate of 75%. The criteria changes only apply to residential mortgages and not to existing interest-only mortgages.


The changes mean that interest-only mortgages will only be available to RBS/NatWest customers who have banked with them for three months prior to application and paid in more than £1,000 salary per month into their current account.

Interest-only mortgages will only be available to customers who earn a minimum of £50,000 gross basic salary a year, before any regular overtime or bonus income is taken into account.

When there are joint applications, the main applicant must earn at least £50,000 basic salary gross and it is not enough for both applicants to be earning at least this amount combined.

The Bank of England expects lenders to tighten their borrowing criteria this year. Lenders have recently made a wave of recent mortgage rise announcements, affecting more than a million borrowers in total, blaming higher funding costs and the weak economy.

The property price boom fuelled a surge in interest-only mortgages, peaking at a third of all mortgage sales in 2007.

Taking such mortgages out was a way for consumers to increase their borrowing capacity at a time when property prices were outpacing wage increases.

More stories

SPONSORED FINANCIAL CONTENT