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Santander raises interest-only equity buffer

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  • 18/02/2021
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Santander raises interest-only equity buffer
Santander is to increase the minimum equity needed in a property on interest-only mortgages in cases where the sale of the mortgaged property is listed as the repayment vehicle.

 

The equity buffer will rise from £150,000 to £250,000 with effect from Wednesday 24 February.

Santander offers interest-only mortgages, up to a maximum 50 per cent loan to value (LTV), and part interest-only, part capital and repayment mortgages, up to 85 per cent LTV.

For interest-only the £250,000 will be based on the deposit and equity at application. And for part and part, the £250,000 will be calculated on the equity at the end of the mortgage term.

Helen Harrison, head of intermediary distribution, Santander (pictured) said: We last reviewed our interest-only buffer in 2016, when Office for National Statistics (ONS) data showed the average house price stood at around £205,000.

At the end of 2020, the same data showed the average house price was nearer £250,000. By increasing our IO buffer we are ensuring customers have strengthened resources when they to need to sell-up and downsize to another property at the end of their IO term.”

 

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