Around this time last year, Spanish banking giant Santander announced it would be changing its criteria to offer buy-to-let mortgages to self-employed applicants.
At the time, I called the move “game-changing”. By changing its criteria with regard to these applicants – following several other changes, including lowering its rental cover – Santander was demonstrating its intention to be a leading player within the BTL sector, I said.
The BTL market may be competitive but, in recent times, there have always been one or two lenders (namely TMW and BM Solutions) that have taken pole position. Yet here was Santander, which, through a series of notable criteria changes and policy adjustments, was gradually positioning itself as one of the BTL industry’s major players.
In that article 12 months ago, however, I stated that there was one area the lender could address in order to tick off all the items on most brokers’ wishlists – to allow borrowers to capital raise to invest in BTL. This was something I thought would be a real boost for the lender and the market.
Well, last month the lender granted my wish and cemented its market position in announcing it would be improving its buy-to-let lending policy to allow remortgaging with capital raising for personal use. What has impressed me most about Santander’s entry to the BTL market is that it has made gradual and considered changes to criteria over time to catch a wider audience. This has ensured it has understood the impact of each change and, therefore, any associated risks.
The new remortgage policy states the property must have been owned for at least six months but the lender says it will consider BTL remortgaging with capital raising for personal use up to 75 per cent LTV, including property improvements, personal use/debt consolidation and investment including purchase of another BTL or residential property.
Santander is swiftly chasing stalwarts BM Solutions and TMW. With its BTL book performing well and the strength of its balance sheet, I cannot help but think it will move from the Europa Cup to the Champions League. And that is great news for brokers.
Over the past two years, Santander has ticked off, one by one, changes in its criteria. From accepting applications from landlords who have a maximum of seven BTL properties (a maximum of five with Santander) to announcing it would be taking applications from landlords with between one and 10 secured credit commitments, it has shown it is really listening to what the market wants from lenders.
And of course, earlier this year, it showed its forward-thinking qualities when it threw its support behind the new-build sector, an area long deserted by most lenders. Santander launched a specialist new-build relationship team in a move that demonstrates just how much the sector has come on.
All credit to the BTL team at Santander for pushing the lender and developing a very competitive proposition.