The restriction, which the bank said was a temporary measure, applies to all new residential applications where any borrower is self-employed.
In an email to brokers, the bank explained the decision had been made following the government’s decision to impose further lockdown restrictions and close schools. The move, it said, would help the bank to manage its pipeline cases.
Santander had already imposed stricter requirements on self-employed borrowers such as asking for borrowers to explain why their businesses had not been affected by Covid-19 and how their income would continue to be sustainable under lockdown restrictions.
Any borrowers whose businesses are currently not trading cannot use their income to support the mortgage application.
Andrew Montlake, managing director of Coreco, said: “We all understand why lenders have to manage their pipeline carefully and this is one way to do it. However, it is a shame that yet again decent self-employed customers are taking the hit.”
Helen Harrison, head of intermediary distribution at Santander, said: “Due to the additional paperwork involved, applications from self-employed customers can take longer to review and, in view of our current service times, our recent changes will ensure we can progress existing applications as quickly as possible.”
Existing self-employed borrowers who are porting a mortgage will be eligible for a mortgage up to 85 per cent LTV.
All full mortgage applications already submitted on the bank’s introducer system by 9pm on Friday 8 January will not be affected.
The new criteria will apply to all applications made from Saturday 9 January.