A welcome reprieve for BTL re-mortgage customers

Santander has amended its buy-to-let (BTL) mortgage prisoner rules to take advantage of the Prudential Regulation Authority’s (PRA) flexibilities.

From 19 April, the bank will assess eligible buy to Let (BTL) remortgage applications, where no increase in borrowing is taking place. A minimum of 125% rental cover at a 5% affordability rate will be used.
It said this aimed to prevent borrowers who already had a BTL mortgage before the new guidelines were implemented on 1 January from being adversely affected when remortgaging.
For mortgages without capital raising, to qualify for the lower affordability assessment which uses 125% rental cover and a 5% affordability rate, applications must meet all the following criteria:
• Property must have been purchased before 1 January 2017
• Remortgage must have no increase in borrowing (adding product fees is allowed)
• No additional lending has been taken on or after the 1 January 2017

Adversely affected
Santander for Intermediaries managing director Brad Fordham (pictured) said: “Some existing buy-to- let customers may be adversely affected following the new borrowing guidelines which were introduced across the industry earlier this year.
“Borrowers who have previously demonstrated they can meet affordability requirements may now find themselves restricted when it comes to remortgaging away from their existing lender.
“Through the introduction of these transitional arrangements, we hope to better support our BTL customers, helping them to secure the best product to meet their needs when they come to renegotiate their product.”

Significant interest
The change follows news that Ipswich BS reported significant interest after moving to help buy-to-let mortgage prisoners remortgage.
In January, Mortgage Solutions asked the top six mortgage lenders by market share in 2015, if they would use the mortgage prisoner rules allowed by the Prudential Regulation Authority.
At the time, only Nationwide had adopted the flexibilities. Santander has now joined it.

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