Santander Overhauls Mortgage Rates

Fri, 19 Jan 2018

Santander Overhauls Mortgage Rates
Santander, one of the UK's largest mortgage lenders, has decreased its highest lending rate. The move comes as a complete change to how the establishment charges its borrowers. When borrowers reach the end of their current fixed-rate deal they are usually moved to the lender's standard variable rate, 4.74pc. The change now offers borrowers a follow-on rate set at 3.25 percentage points above the Bank of England base rate (3.75pc).

To add perspective, for people with £150,000 outstanding they will save £83 per month on their mortgage payments with this new scheme. From January 23rd, 2018, anyone who takes out a loan with Santander will be automatically moved to the new rate at the end of any fixed-rate-deal.

For borrowers who are still paying the standard variable rate, most will be offered the chance to switch immediately. The new rate is set to be attractive to customers who might run into financial difficulties and be unable to remortgage. However, customers are advised to always start researching new deals three months before their fixed-rate deal expires.

Although this new scheme is a promising option, yet some borrowers will not be eligible for this new rate and risk losing out. Borrowers who have missed a payment or been in arrears for the past 12 months will remain on the standard variable rate. These borrowers are known as "mortgage prisoners".

The term "mortgage prisoners" refers to those who are stuck on the standard variable rate and unable change to a better deal.

Mortgage prisoners argue that the high rates they are being charged are the reason for their missed payments. They believe that they will continue to miss out, as they are stuck paying extra payments that leaves them financially worse off.

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