Santander lowering maximum loan size on buy-to-let mortgage range

by Aaron Strutt

Nov 01 2016

Santander has announced plans to change the buy-to-let rental calculation it uses to work out the size of the mortgages it provides.

From Wednesday 23 November, the buy-to-let rental cover is increasing from 125 to 145 and a single affordability rate of 5.5% will apply.

Based on the existing 125 at 5% buy-to-let calculation, landlords with a 40% deposit can currently borrow up to £336,000 if a property generates £1,750 rent each month. When the 145% at 5.5% starts, this will reduce to £263,322.

Santander uses a tiered system to work out the size of it buy-to-let mortgages, depending on the size of your deposit. It uses a notional rate of 5% up to and including 60% loan-to-value and 5.5% over 60% loan-to-value.

Aaron Strutt, product director at Trinity Financial, says: “More lenders are changing their buy-to-let rental calculations and there will almost certainly be more over the coming months. 

“The biggest lenders are under real pressure from the regulators to change the way they operate, especially with the phased tax changes set to hit landlords over the coming years.”

Santander is offering some of the lowest buy-to-let mortgage rates and they provide a free property valuation. Applicants will need a £25,000 income to qualify, although if they have five or more let properties on completion at least one applicant will need to earn £50,000. 

Click here to use our rental income calculator.

To secure a more generous buy-to-let mortgage, call Trinity Financial on 020 7016 0790.