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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% to 50%.

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 cut their maximum LTV for interest-only lending from 75% to 50%. In February, Santander decided to cut its maximum LTV on interest-only to 50%.

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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  • bob the builder 27th March 2012 at 11:11 am

    Personally I think that you need to realise that our market is evolving and digging your heels in the ground and refusing to move with the times will only see your business fall by the way side! For me I think it is now more important than ever to be speaking to your clients and ensuring that they are aware of what’s changing and where they stand with regards to their mortgage.

    Remember at the end of the day if you choose to do nothing who is to blame? The lender for changing their policy or us as the advisers for not acting on the changes?

  • Bobby 26th March 2012 at 5:01 pm

    Who pays our mortgages if we do this ?

  • Shaks 26th March 2012 at 3:14 pm

    when we all decide to unite as one broker community and refuse to submit any business for a whole month. This is what’s needed. Massive Action. Our professional bodies should organise this without delay. We should then demand compensation from all the lenders or refuse to submit any business at all.

  • Bobby 26th March 2012 at 9:15 am

    When will this madness end ?