Santander will increase the term of its interest-only mortgage products to 40 years from the 9th of April 2024. This comes alongside a number of other changes announced by Santander that may help borrowers meet its affordability criteria for the mortgage they need.
What changes has Santander made to its interest-only mortgages?
Santander has increased the maximum number of years over which borrowers can arrange interest-only mortgages from 25 years to 40 years for new and existing mortgage customers. Interest-only mortgages allow the borrower(s) to choose to pay the interest that accrues on the mortgage loan with an agreement to repay the capital amount at the end of the mortgage term. Increasing the term of the mortgage won't change the mortgage payment in the way it would for a repayment (capital and interest) mortgage but it will give borrowers more time before they are required to repay the mortgage loan.
For some borrowers, this will mean more time to build funds to repay the mortgage at the end of the term. For borrowers who plan to repay their mortgage with the proceeds from the sale of their property at the end of the term, the extra years could mean that they are closer to retirement or may be in a situation where downsizing is more convenient.
Santander is making some other changes to its interest-only mortgage products including the income required for applicants to access products up to 75% and the amount of equity needed for those who intend to sell their property when it comes to repaying the mortgage.
You can search for the best mortgage deals based on your requirements using our mortgage rate comparison tool which filters mortgage deals, meaning you can find an interest-only mortgage deal that fits your needs. You will also find a detailed summary of mortgage products, fees and eligibility criteria in our Santander mortgage review.
Some lenders limit the maximum term offered when you arrange an interest-only mortgage to 25 years, so 40 years will appeal to borrowers who wish to secure an interest-only mortgage loan over a longer period.
Lenders offering the longest interest-only mortgage terms
| Bank | Maximum interest-only mortgage term¹ |
| Santander | 40 years |
| Lloyds Bank | 35 years |
| Nationwide | 25 years |
| Barclays | 40 years |
| Royal Bank of Scotland | 40 years |
| HSBC | 25 years |
¹ Most lenders stipulate a maximum age at which your mortgage term must end and this may be tied to your retirement age
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Child benefit and National Insurance changes improve affordability
Changes announced at this year's Spring Budget mean that child benefit payments will be included for income where mortgage applicants earn up to £60,000 per annum. Also, a reduction in National Insurance contributions will mean that some applicants will experience an increase in earnings after tax, potentially helping them achieve a higher mortgage loan.
Below we explain how much you can borrow based on your earnings with Santander, however, you should speak to a specialist mortgage adviser* for advice and guidance to help you find the best mortgage lender and deal to suit your specific mortgage needs and circumstances.
Santander's loan to income multiples
| Repayment / Capital and Interest mortgage | Interest-only mortgage | ||||
| The combined income of all applicants | 75% LTV or less | 75% to 85% LTV | Over 85% LTV | 75% LTV or less | Over 75% LTV |
| Less than £45,000 | 4.45 times | 4.45 times | 4.45 times | 4.45 times | 4.45 times |
| £45,000 to £99,999 | 5.00 times | 5.00 times | 4.45 times | 4.45 times | 4.45 times |
| £100,000 or more | 5.50 times | 5.00 times | 4.45 times | 5.50 times | 5.00 times |
How to source the best mortgage product
Higher interest rates have made interest-only mortgage options more attractive to borrowers, especially those wishing to reduce their monthly mortgage repayments, however, it should be carefully considered. Arranging an interest-only mortgage means that you won't reduce the capital loan of your mortgage and this may put you at greater risk of negative equity, depending on how much equity you started with. Also, the mortgage loan will eventually have to be repaid and long-term plans can change as you progress through life, so it is useful to weigh up all the alternatives before making your decision.
Mortgage brokers can provide you with specific guidance and advice based on your needs, circumstances and financial goals while providing access to a range of mortgage deals, including those that are only offered through intermediaries. You can find a mortgage broker in your local area using the online directory for financial professionals, VouchedFor* where you can source specific mortgage advisers who suit your needs and location. Alternatively, you can arrange a call with Habito*, an online mortgage brokerage that offers free mortgage advice and access to over 90 lender's mortgage products.
Further reading
What if I can't pay off my interest-only mortgage
Can I change my existing mortgage to interest-only?
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