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Santander tightens interest-only criteria again

Santander has further tightened its interest-only criteria and will no longer accept pensions, the sale of a second property, bonuses or cash savings as repayment vehicles.

The move, effective from March 28, comes a month after it cut its maximum loan-to-value for interest-only lending from 75 per cent to 50 per cent.

The changes will not affect existing borrowers and will apply to both direct and intermediary channels.

From next Wednesday, Santander will only accept the sale of the main residence or investments including endowments, stocks and shares Isas, investment bonds or unit trusts as repayment vehicles.

However, the lender will not consider future growth projections for these investment vehicles and they must be at least equal to the value of the loan. Santander will also apply a buffer of £100k between the current property value and the total loan required.

The news follows NatWest Intermediaries Solutions’ decision to temporarily suspend its interest-only lending.

Earlier this week, both Nationwide Building Society and Coventry Building Society’s decision to  cut their maximum LTV for interest-only lending from 75 per cent to 50 per cent. In February, Santander decided to cut its maximum LTV on interest-only to 50 per cent from in February.

A Santander spokeswoman says: “We constantly review our lending policy to ensure that we are lending responsibly. We believe these changes are prudent in today’s challenging economic environment and follow recent competitor changes in this area.”

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Comments

There are 2 comments at the moment, we would love to hear your opinion too.

  1. Banks acting after the horse has bolted once again. They should at least allow exitsing borrowers the ability to sta in their homes if they are unable to continue to repay at the end of their interest only term. They were in enough of a hurry to lend in the first splace.

  2. What is the problem with interest only mortgages? its much better to encourage people to own their own homes than renting privately surely! The banks will get their money back in due course so is their a problem with people wanting to own a home? Show some flexibility lenders and stop being twats!!

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