Santander still not lending to self-employed borrowers with less than 25% deposit
Santander has confirmed it is still limiting mortgage applications for the self-employed to 75% loan-to-value. Some employed borrowers can secure 5% deposit mortgages through the bank when they have a good credit score.
When the pandemic hit, mortgage lenders started limiting mortgage applications and tightening acceptance criteria, especially for the self-employed. Thankfully, many lenders have changed their policies, although Santander has not returned to its pre-pandemic limits for the self-employed.
How does Santander work out how much self-employed people can borrow?
Santander will take an average of the last two years' income figures, or the latest year if this is lower. For existing Santander mortgage customers moving home, its mortgage underwriters may be able to utilise a more individual assessment if you do not have equity in your home.
What evidence of income will Santander require?
If you are running a limited company, you will need to provide an accountant's certificate as proof of income. For sole traders and partnerships, you can also provide an accountant's certificate or the latest two years' Self Assessments Tax Calculation Forms (SA302's) and Tax Year Overviews plus your latest business banking account statement dated within the last 30 days.
Santander's covid policy
Santander is also changing its definition of a Covid-19 impacted self-employed borrower to now only capture details of outstanding support loans. Santander will remove its Covid-19 question and ask borrowers to confirm any outstanding loans.
Are mortgage lenders keen on the self-employed?
Aaron Strutt, product director at Trinity Financial, says: "There is a lot of competition in the market to attract all types of borrowers, including the self-employed. Our brokers have access to a wide range of lenders actively pushing to lend to the self-employed, and they say if the case "makes sense" they will look to lend."
Other important points to access Santanders self-employed mortgages:
- For all self-employed applications, the most recent year-end must not be more than 18 months before the date of the application.
- Santander treats borrowers as self-employed when: - Their shareholding in a limited company (or combined shareholding of all applicants) is 20% or more, or when you are employed in a family business owning 20% or more.
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