Santander has announced an overhaul of its mortgage policies to “address affordability” in the property market for prospective homebuyers.
The high street lender confirmed the changes, which come into effect on April 9, will provide those attempting to get on the ladder with a wider range of products.
Here is a full list of the changes to the bank’s mortgage policies which will be implemented next week:
- Overhaul of interest only mortgages
- Update to affordability calculations to factor in changes to Child Benefit and National Insurance rates
- Changes to larger loans to “improve affordability” for customers.
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Santander is overhauling its mortgage policy to make property ownership "affordable"
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Interest only mortgage deals
Notably, Santander is raising the maximum term it offers on interest-only mortgages from 25 to 40 years in line with its capital and repayment mortgage.
Furthermore, the bank will allow applicants with a combined overall income of £200,000 or more to access up to 75 per cent LTV products, rather than a single applicant needing to earn at least £250,000.
Prospective homebuyers who are applying for an interest-only mortgage, who plan to sell their home later, will have to have at least £300,000 equity in the property.
According to Santander, these changes to interest-only mortgage products will assist customers in gaining access to a wider selection of favourable deals.
Affordability calculations
During the Spring Budget, Chancellor Jeremy Hunt announced drastic changes to National Insurance and Child Benefit which would impact working-age people.
Going forward, Santander will take Child Benefit into account for anyone earning up to £60,000 following the increase to the benefit’s high-income charge threshold.
Furthermore, the bank will factor in the cut to the National Insurance contributions for employees and self-employed applications.
This month, the levy’s rate is being slashed from 10 per cent to eight per cent for workers, with self-employed set to pay six per cent.
Larger loans
Finally, Santander is preparing to make changes to loan-to-value (LTVs) on residential fixed rate loan to make property more affordable.
All mortgage products between £1,000,000 and £2,000,000 will see their minimum LTV increased from 75 per cent to 85 per cent.
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The Bank of England base rate is at a 15-year high of 5.25 per cent GB NEWSAccording to the lender, this shift will support customers in getting a LTV product that may not have been accessible to them.
Graham Sellar, the head of Development of Mortgages at Santander, outlined why the bank is looking to help Britons trying to buy property.
He explained: “Home ownership is a key focus for many, but affordability can often be people’s Achilles heel.
“Today’s changes, including opening up interest only products for more people, while reflecting recent tax changes that improve people’s take-home pay in our affordability calculations, aim to address this and support more homeowners.”
The above changes to Santander’s mortgage policies will be applied from Tuesday, April 9, 2024.