Santander introduces minimum salary to qualify for interest-only mortgages

by Aaron Strutt

Nov 09 2015

Santander for Intermediaries has announced it will introduce a minimum basic salary to qualify for its interest-only mortgages.

Single applicants will require a gross income of at least £50,000, while joint applicants will need a combined gross income of £70,000.

Aaron Strutt, product manager at Trinity Financial, says: “Santander has one of the most generous interest-only policies and it has very competitively priced rates. 

“If you are planning to use the sale of your home as a repayment vehicle for an interest-only mortgage, you will need at least £150,000 equity within your property to qualify. Santander will also cap the maximum mortgage term to 25-years.”

This policy will make it harder for some borrowers to qualify, although there may be other lenders willing to help. Over the last six months a host of lenders have improved their interest-only mortgage propositions, including NatWest, Kensington, Woolwich for Intermediaries and Leeds Building Society.

Maximum income multiples

Santander has also announced that it is making changes to its maximum income multiples.

All first-time buyers and clients borrowing over 90% loan-to-value will be limited to 4.45 times income. This is down from 4.49 times.

Second-time buyers and remortgage customers will still be able to borrow up to five times their salary.

Santanader says that these changes reflect the continued prudent approach to lending and they are line with current market conditions.

Competitive mortgage rates

Trinity Financial has access to the Santander's 1.59% mortgage which is fixed until 2 February 2018.  

At the end of the fixed rate period, the mortgage reverts to the lenders standard variable rate, which is currently  4.74%. The overall cost for comparison is 4.3% APR.

Borrowers will need a 35% deposit to qualify. There is a maximum loan size of £1 million and the arrangement fee is £995.

Monthly repayments

The monthly repayments on a £500,000 interest-only mortgage would be £662.50. This will rise to £2,020 on full capital repayment over a 25-year term.

For help to secure an interest-only mortgage, call Trinity on 020 7016 0790.