Santander introduces two-tier buy-to-let mortgage rental calculations

by Aaron Strutt

Feb 04 2016

Santander for Intermediaries is introducing a new two-tier buy-to-let rental calculation potentially reducing its maximum loan sizes for many landlords.

From 21 February, the affordability rate for mortgages up to and including 60% loan-to-value will remain at the existing rate of 125% at 5%.

However, for mortgages over 60 loan-to-value, the calculation will increase from 125% at 5% to 125% at 5.5%.

Aaron Strutt, product manager at Trinity Financial, says: “Most of the bigger buy-to-let mortgage lenders are tightening their rental calculations and offering smaller loans.

“Surprisingly, one lender has just launched into the market and it is really bucking the trend by providing landlords with more generous rental calculations and larger mortgage loans.

“The loan amount will be bigger if the property is in London and the rates will be cheaper if the client earns £100,000.”

Buy-to-let mortgage borrowing

For the next few weeks a landlord with a 30% deposit will be able to borrow £288,000 through Santander if their property generates £1,500 each month. But this will reduce to £261,818.

Santander comment

A spokeswoman for Santander told Mortgage Strategy magazine: “This change reflects our continued prudent approach to lending and affordability and is in line with current market conditions.

“The buy-to-let market is undergoing significant change with the additional 3 per cent stamp duty on second home purchases from 1 April, and the phased reduction in tax relief starting next year adding to the cost of being a landlord. As a result landlords will be reviewing their business models and lenders will also be reviewing their rental cover calculations to ensure affordability assessments keep pace with the change.”

For help to secure a buy-to-let mortgage, call Trinity on 020 7016 0790.