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"Santander slips in some useful improvements to their criteria to help beleaguered borrowers"

Journalist: Riz Malik

ended 05. April 2024

Santander has today announced a number of product and policy changes, below. Newspage asked brokers for their views on the changes, whether they could help stimulate the market and what it says about Santander's appetite to lend (bottom).

LTV Limits

Santander is changing LTV limits for large loans on Tuesday 9th April as highlighted below:-

Loan amountCurrent LTVNew LTV
Over £1 million and up to £2 million75%85%
Over £2 million and up to £3 million70%75%

To support the changes, they are also increasing the maximum loan size on selected residential fixed-rate products, including new builds. They are introducing new large loan products into the new business range.

Product changes     

o Increasing the maximum loan size from £1.5m to £3m on residential fixed products up to 75% LTV.

o Increasing the maximum loan size from £1m to £2m on residential fixed products up to 85% LTV.

o Withdrawing all 60%, 70% and 75% LTV 2 year and 5 year fixed large loan products with a £2,499 fee for loans above £1.5m and up to £5m.

o Launching 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.

o No changes to residential tracker

Interest only

They are also making changes to their interest only policy.

o The maximum loan term is increasing to 40 years from 25 years for new and existing customers who are increasing the interest only amount.

o Where the repayment vehicle is sale of property, the minimum equity needed is increasing to £300,000 from £250,000. This applies to new and existing customers who are increasing the interest only amount.

o Where any part of the mortgage is on an interest only basis, the maximum LTV for the overall lending is 85%. Where there’s a combined gross income of £200,000 or more, any lending over 75% LTV must be on a capital and interest basis. For applicants with a combined gross income of less than £200,000, any lending over 50% LTV must be on a capital and interest basis.

Other residential policy changes

On Tuesday 9 April, they are also updating their affordability calculator to take into account the 2024/2025 tax year changes.

In addition, the Child Benefit threshold is increasing to £60,000 from £50,000. Child Benefit shouldn’t be included where the applicant receiving the benefit or their partner's total gross income is above £60,000.

10 responses from the Newspage community

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Riz Malik
Independent Financial Adviser at R3 Wealth
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 so these are welcome changes.
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Ben Perks
Managing Director at Orchard Financial Advisers
Santander have smashed 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 some. In times when rates are turbulent, criteria can be the best tool available to lenders to attract more business, so this shows Santander's appetite to lend, expecially on the chunky stuff.
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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.
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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.
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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.
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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.
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Michelle Lawson
Director at Lawson Financial
This is a mixed bag of policy adjustments that will help some borrowers. Overall, these are postitive and understandable changes that will help Santander compete more in the larger loan and higher income markets, but they will only affect and help a small minority of borrowers.
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Harps Garcha
Director at Brooklyns Financial
These are positive criteria changes to Sandanter's critiria, especially in the £1million plus mortgage market. These tweaks will not help the mass market, but they will certainly assist a number of potential homeowners, particularly in the South East.
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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 has done this afternoon. Although the majority of mortgage account holders will largely be unaffected by the loan size increases, the interest-only clarity might help some borrowers. Brokers have all been expecting fixed rate decreases this week, so maybe next week is when they will come as market rates do show that reductions are overdue now.
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Ben Tadd
Director at Lucra Mortgages
Santander are 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. This is 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.