Santander Equity Release

Spanish bank Santander has a long history that spans back to 1853.

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Spanish bank Santander has a long history that spans back to 1853. It was only in late 2004 when the company launched its services in the UK. As of 2021, Santander offers equity release products to customers from Legal & General. Here, we delve into who can benefit from the bank’s lifetime mortgages and whether it’s the right choice for you.

Equity release products offered by Santander

Santander Equity Release

Unlike other lifetime mortgage providers, Santander’s products are only available for existing customers who want to pay off an already existing mortgage. Through Legal & General, Santander customers can access:

Flexible Lifetime Mortgage

Through this option, you can release equity from your property to pay off the remaining cost of your already existing mortgage. Once your interest-only mortgage is paid in full, including any early repayment charges, you could potentially access more funds if you didn’t use all the equity available.

You won’t have to make any monthly payments on the loan, regardless of whether you take a lump-sum payment or small instalments over time. Payment is only made at the end of the plan when you sell your property (usually when you either pass away or go into full-time care).

Optional Payment Lifetime Mortgage

This is a voluntary repayment plan similar to the flexible lifetime mortgage scheme, but instead of waiting until the end of the plan to pay off the loan and interest, you can start paying the costs monthly from the get-go. How much you pay and how often is up to you. This option allows you to stay on top of the interest roll-up.

Eligibility requirements

You must have an already existing mortgage with Santander. In addition to this, you must be at least 55-years-old and plan to use your primary residence in the UK. Also, your property must have a value of at least £70,000 (£100,000 for apartments, maisonettes, and ex-council houses).

What Santander takes into account

Legal & General and Santander will take into account various factors, such as the property value, the resale potential, location issues (whether it’s in a flood-risk zone or an area of extensive commercial development), and the condition. The check is done to ensure that the bank and lender are protected.

You must also meet the minimum eligibility requirements mentioned above.

Features and benefits of Santander Equity Release

We compare plans from the leading equity release providers

There’s a range of benefits to the equity release products offered through Santander that might help you make a decision:

  • You retain 100% ownership of the property.
  • You can pay off your existing mortgage. Most lenders won’t approve an equity release application if you still have a considerable amount to pay on a standard mortgage.
  • No negative equity guarantee.
  • Tax-free payments.
  • Flexible repayment options.
  • Fixed interest rates.

Remember that you can only access Santander’s equity release services if you already have a standard mortgage with the bank.

How much does Santander Equity Release cost?

The cost of an equity release scheme will depend on multiple factors, such as the property value, your age, and the plan you choose. In the case of Santander, you’ll be borrowing money to pay off an already existing mortgage. To get an exact figure, you should contact the bank and discuss your options.

To give you an idea of the costs involved, we’ve provided a helpful quote example below:

  • A 55-year-old applicant with a property worth £200,000 and an outstanding mortgage of £50,000 could potentially access £52,335 at 3.72%. In this case, the equity release would be sufficient to pay off the outstanding mortgage. Also, the applicant would pay £132,453 after 25 years (300 months) due to interest roll-up.

Note that the estimate doesn’t take into account early repayment fees or interest rates that Santander might offer you.

Overview of Santander Equity Release plan details.

Minimum equity release £70,000 (£100,000 for flats)
Minimum applicant age 55 (including joint applications)
Plan Options Lifetime Mortgage.
Repayment Options End of plan. Capital plus interest.
Second Property Equity Not available.

Santander Equity Release ratings

Since Santander doesn’t provide its own equity release products, rating companies haven’t reviewed the bank’s services. However, Legal & General, the lender behind its lifetime mortgages, received two 5-star awards for its Flexible Lifetime Fixed and Optional Payment Lifetime Fixed plans from British rating company Defaqto.

Can you exit a Santander equity release plan early?

Equity release schemes are not designed to be terminated early. It’s not optimal to exit a plan before it runs its course. However, there are situations where your circumstances change, and you need to terminate your plan. Most lenders allow you to exit, but you’ll be liable to pay an early payment charge.

Since the Santander lifetime mortgage is used to cover the remainder of your existing mortgage, it could mean that you are left with nothing, or you won’t have enough equity to cover the fee. As a result, you’ll have to use your personal funds.

Can your application be declined?

There are plenty of reasons why lenders decline applications for equity release. Here are some of the most common ones:

  • Condition of the property.
  • Location.
  • Illegal construction.
  • Clutter in the property.
  • Presence of asbestos.
  • Poor resale value.
  • Proximity to extensive commercial development.
  • In a flood-risk zone.

If you’re concerned that you may not be approved, discuss your situation with Santander before applying. You can always work on the variables under your control to improve the chances of approval.

Is Santander Equity Release right for you?

If you already have a mortgage with Santander and want to pay it off, there isn’t a better option. The company’s excellent partnership with Legal & General was recently renewed in 2021 and indicates that Santander lifetime mortgages are here to stay.

On the other hand, if you don’t have a Santander mortgage, you won’t be able to access the bank’s equity release services. That could, of course, change in the future.