Santander has headed off any risk of creating buy-to-let mortgage prisoners by announcing that it will assess landlord remortgages at low affordability rates.
The lender says that from 19 April a minimum of 125 per cent rental cover at a 5 per cent affordability rate will be used.
Santander says: “This aims to prevent borrowers, who already had a buy-to-let mortgage before the new PRA buy-to-let guidelines were implemented on 1 January 2017, from being adversely affected when remortgaging.”
Concerns have been raised that the PRA’s 2017 rules that buy-to-let loans should be stressed at 145 per cent at 5.5 per cent would lead to landlords being stuck on expensive SVRs and unable to remortgage.
Santander says for mortgages without capital raising to qualify for the lower affordability assessment they must have been bought before 1 January.
The remortgage cannot increase borrowing, and no additional lending can happen on or after 1 January 2017.
Santander managing director Brad Fordham says: “Some existing buy-to-let customers may be adversely affected following the new borrowing guidelines which were introduced across the industry earlier this year.
“Borrowers who have previously demonstrated they can meet affordability requirements may now find themselves restricted when it comes to remortgaging away from their existing lender.
“Through the introduction of these transitional arrangements, we hope to better support our buy-to-let customers, helping them to secure the best product to meet their needs when they come to renegotiate their product.”