Santander tweaks interest-only equity buffer

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Santander is changing its interest-only equity buffer to reflect equity at the end of the mortgage term.

The lender sent a note to brokers saying it is altering its £150,000 minimum equity requirement where a mortgage includes an interest-only sale of the mortgaged property loan part.

The £150,000 buffer is currently based on the equity at application, but for part interest-only sale of property with part capital and interest the figure will be calculated on the equity at the end of the mortgage term.

For pure interest-only mortgages with sale of property the £150,000 will still be based on the deposit/equity at application.

The new criteria come in on 21 February.

The broker note says that the current criteria will apply to all applications received until the end of 20 February.

Santander have been approached for comment.