Santander providing larger buy-to-let mortgages with its five-year fix

by Aaron Strutt

Jul 10 2017

Santander for Intermediaries has introduced a new 4.5% buy-to-let affordability rate to provide landlords with larger mortgage loans.

When buy-to-let investors lock into one of the bank's five-year fixed rates, rather than a two or three-year fix, they can access a lower rental cover affordability rate. This figure is used to work out the maximum loan size.

If your property generates £2,500 rental income each month and you are purchasing a property or remortgaging with capital raising, using Santander’s new calculations, the maximum loan size would be £376,175. It increases to £459,770 if you take a five-year fix.

If you remortgage to Santander and raise additional capital, with the same £2,500 rental income, the loan size would be £376,175 or £459,770 on a five-year fix. If you remortgage without capital raising the maximum loan would be £480,000 or £533,333 on the five-year fix.

Aaron Strutt, product director at Trinity Financial, says: “The banks and building societies use rental calculations to work out how much they will lend and the figures tend to be very different. Some of the lenders take personal income into consideration so they can increase the loan size.

“Santander’s policy change is likely to result in more landlords taking five-year fixes because they can borrow so much more money. The new 4.5% affordability rate could make a real difference to your application, particularly if you are looking to remortgage without capital raising.”

Professional landlords

As part of the upcoming Prudential Regulation Authority changes, Santander has announced if you own four or more managed let properties you will be considered as a portfolio landlord.

Santander has introduced specific rules about qualifying for a buy-to-let mortgage, with new minimum qualification incomes and maximum property portfolios. These rules change if you are purchasing or remortgaging a property.

Call Trinity Financial on 020 7016 0790 to secure a more generous buy-to-let loan size.