As of Tuesday 9th April, Santander is set to make a number of changes, including increasing loan-to-value (LTV) limits for large loans.
For loans over £1m and up to £2m, the lender will now offer up to 85% LTV, while for loans over £2m and up to £3m, the lender will offer up to 75% LTV.
To support the changes, Santander is also increasing the maximum loan size on selected residential fixed-rate products, including new builds.
It is also launching a number of new large loan products into its new business range.
These include new 60% LTV 2-year and 5-year fixed large loan products with a £1,999 fee for loans above £3m and up to £5m.
Santander is also making changes to its interest only policy, increasing the maximum loan term to 40 years from 25 years for new and existing customers.
Additionally, where the repayment vehicle is sale of property, the minimum equity now needed is increasing to £300,000 from £250,000. This applies to new and existing customers who are increasing the interest only amount.
Where any part of the mortgage is on an interest only basis, the maximum LTV for the overall lending is now 85%.
Finally, the lender will also be updating its affordability calculator to take into account the 2024/2025 tax year changes.
Reaction:
Riz Malik, director at R3 Mortgages:
“Santander slips in some useful improvements to their criteria to help beleaguered borrowers.
“Competing on criteria is just as important as competing on rate during these challenging times.”
Justin Moy, managing director at EHF Mortgages:
“There are some improvements within this shake-up of policy, in particular the larger loans above £1m which will please those borrowing around London in particular.
“Tinkering with interest-only borrowing options will please some and frustrate others, but overall the changes look positive and align Santander with most other high-street lenders.”
Gary Bush, financial adviser at MortgageShop.com:
“If you aren’t happy with decreasing rates why not fiddle with the underwriting criteria to attempt to gain an advantage, this is exactly what Santander Bank has announced this afternoon to gain media soundbites.
“Although the majority of mortgage account holders will largely be unaffected by the loan size increases – the interest-only clarity might help some borrowers.
“Financial Advisers have all expected fixed rate decreases this week, post Easter, maybe next week is all we have to look forward to at the moment as market rates do show that reductions are overdue now.”
Dariusz Karpowicz, director at Albion Financial Advice:
“Santander’s adjustments are a step forward, especially for those eyeing the upper end of the market.
“Raising LTV limits on large loans and tweaking their affordability calculator shows a keenness to lend more freely.
“However, for the average first-time buyer, grappling with sub £300,000 purchases, these changes might not resonate as much.
“It’s a move that benefits a niche segment but doesn’t shift the needle for the majority.”
Michelle Lawson, director at Lawson Financial:
“A mixed bag of policy adjustments that will help some borrowers.
“Overall, positive and understandable changes which helps Santander compete more in the larger loan and higher income markets but this will only affect and help a small minority.”
Ben Perks, managing director at Orchard Financial Advisers:
“Santander smashing through the ceiling of their higher loan limits.
“Whilst many of these changes don’t help your everyday borrower it is great to see a lender willing to tweak criteria to help people.
“In times when rates are turbulent, criteria can be the best tool available to lenders to attract more business, this shows Santander’s appetite to lend, especially on the chunky stuff.”
Ben Tadd, director at Lucra Mortgages:
“Santander clearly targeting an increase to their share of the large loans market by upping their maximum borrowing amounts available to higher loan-to-value thresholds.
“A move that will help stimulate competition in this space with another big high street lender entering the mix and competing with the private banks.
“They can be applauded for recognising borrowers needs to take interest only mortgages for longer, with an extension to the maximum term from 25 up to 40 years, a welcome addition to lending criteria for many, along with an increase to maximum loan-to-values for part and part lending, demonstrating greater flexibility for borrowers and a keen willingness to lend by Santander.”
Harps Garcha, director at Brooklyns Financial:
“Positive criteria changes to Sandanter’s criteria especially in the over £1m mortgage market
“Recent tweak’s will not help the mass market, however it will certainly assist a section of potential homeowners, particular in the South East.”
Andrew Montlake, managing director at Coreco:
“In the battle for business in the mortgage world, it is not always all about the rate: mortgage criteria are just as important.
“Santander has made a number of interesting changes that should see them able to offer help to a larger range of clients than before, particularly in the higher loan size bracket.
“The large loan space is set to become a competitive arena for lenders going forward as quality, lower LTV lending becomes a more attractive proposition.”
Rohit Kohli, director at The Mortgage Stop:
“Santander softens their criteria to bring borrowers improved options to balance their budgets.
“A lot of borrowers don’t realise that it’s not just about the headline interest rate that a lender offers but also their lending criteria and how, with the right lender, they could put themselves in a better position for the circumstances than just trying to get the lowest rate.
“These changes from Santander will surely pique the interest of many people looking at ways to balance their books in the cost-of-living crisis.”
Nicholas Mendes, head of marketing at John Charcol:
“With swaps unlikely to see any significant movement until the next rate bank rate cut, it is a prime moment for lenders to tweak their criteria to increase their competitiveness in the current market.
“While interest only isn’t a new phenomenon, 40-year interest-only sees Santander jump up the pecking order over other high street lenders such as Nationwide, who maximum term in interest only is 25 years.
“Unfortunately, the minimum income is likely to be a barrier for the typical mortgage holder looking to take advantage of such a deal.”
