Santander mortgage criteria is tightened for interest only mortgage deals.

Santander mortgage criteria has been tighten for those borrowers wanting interest only mortgage deals.

Deal Direct think this may set a precedent and they fear many lenders may follow suit which would bring to the end interest only borrowing which, for some borrowers is their only realistic hope of owning a property.

The lender is the first high street bank to demand home-owners have a minimum 50 per cent deposit or 50 per cent equity built up in their house when applying for interest only mortgage deals. This change in criteria will affect both borrowers buying a new property and those existing mortgage borrowers who plan to move home.

Home-owners whose current deal breaches Santander's new mortgage criteria may find that they will need to either switch deals and take on a repayment deal or they may need to settle a large portion of their mortgage debt.

Deal Direct can help you get the best mortgage deal available in the UK today.

Prior to the credit crunch, lenders interest only deals were highly popular with many first-time home buyers as the mortgage payments demanded were low in comparison to a standard repayment mortgage. Since the credit crisis, lenders have tended to only accept home-buyers for a minimum 75 per cent of the house value on interest only mortgage deals.

Providing the borrower has a repayment strategy in place, interest only deals are not necessarily risky. However, high street lenders are becoming far more strict with what they will consider as an acceptable mortgage repayment strategy. Relying on future inheritance, a possible pay increase or a house price increase is no longer deemed suitable.