Santander has adapted their buy to let range in a bid to facilitate landlord remortgaging, following new borrowing guidelines which they feel could trap investors.
The bank will now assess buy to let remortgages which have 125 per cent rental cover at 5 per cent for all borrowers who secured their mortgage before the introduction of the Prudential Regulation Authority rules at the start of January this year. The motivation behind the move by Santander was to ensure that landlords don’t become ‘mortgage prisoners’, supporting them through offering greater flexibility to property investors in the buy to let sector.
The PRA’s new rules that buy to let loans should be stress tested at 145 per cent at 5.5 per cent has led to concerns that this could lead to landlords being stuck on expensive SVRs, unable to remortgage to better deals at lower interest rates.
In order to qualify for the lower affordability assessment applications, the property must have been acquired before the 1st of January 2017. It is integral that no additional lending was taken out after this date, and the remortgage must not have any interest in borrowing.
Managing director of Santander for Intermediaries, Brad Fordham, commented on the new ruling, saying: ‘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 BTL customers, helping them to secure the best product to meet their needs when they come to renegotiate their product.’