As of tomorrow (Thursday the 26th of May) Santander have confirmed that they have now increased their maximum LTV (Loan to Value) for self-employed people from 75% i.e. 25% deposit, to 90% i.e. 10% deposit. This is fantastic news as Santander has held firm at only offering 75% mortgages for self-employed people for a long time now, as direct result of the COVID-19 pandemic.
Santander tightened their LTV criteria across the board in line with other lenders however self-employed individuals were hit the hardest as the uncertainty around being able to earn self-employed income was up in the air and most banks assumed that income would be significantly reduced. Although the pandemic did disrupt a lot of sole-traders and limited company director’s incomes, it was quite clear that a lot of businesses could continue, and income still came in.
Despite this, and despite turning back other COVID-19 criteria changes, Santander kept hold of its self-employed rules. Now, over two years later, self-employed people seeking a mortgage have been thrown a lifeline by a quality high street bank.
As well as releasing new information about new mortgage customers, Santander have also clarified that current Santander mortgage customers moving home will continue to be able to borrow up to 95% LTV.
How Will Santander Support the Changes to Self-Employed Criteria?
Because of the rise in LTV, mortgage affordability will inevitably change. Commenting on how they will support this in an official statement to mortgage intermediaries, Santander have said: ‘Our affordability calculator available on our website will be updated to reflect this loan to value change so please use this calculator on our website to make sure you get an accurate reflection of what we can lend your self-employed clients now.’
They have also re-iterated some previously announced changes to their rules and regulations around self-employed company director mortgage applicants:
Limited company directors
- We only accept an accountant’s certificate – not tax calculations (SA302s) and TYOs.
- Use the business year-end salary and dividends for income assessment from the accountant’s certificate (not tax year-end figures).
- Use the income from an accountant’s certificate in the affordability calculator before submitting an AIP or FMA, to make sure you use the correct income and net pay figures.
What Do the Mortgage Experts Say?
Senior mortgage and protection advisor at Oportfolio Jade Pinkerton had this to say: “This is huge for the mortgage and home buyer market. Santander have capped maximum borrowing for self-employed people at 75% for so long now as a reaction to COVID. Some lenders still have self-employed restrictions on calculations/enhanced criteria. It’s about time that Santander have finally moved forward and started to have trust in self-employed customers again. Santander is a great lender with great criteria, great products, and great rates. Now we can finally start helping our self-employed clients with smaller deposits to achieve their property purchases.”
If you or anyone else you know is self-employed with less than 25% deposit, feel free to call our helpful team of advisors today to see how we can help you.