Buy-to-let mortgages are a savvy way to secure an investment in property. Rental properties can provide a regular income stream as a long-term retirement plan but are also an option for existing retirees who wish to supplement their revenue.
Revolution Finance Brokers has prepared this quick-fire guide to answer the most commonly asked questions we receive from retirees who are considering investing in the property rental sector.
For more information about BTL mortgages, retirement investments, maximum ages for buy-to-let mortgages and the factors that lenders will take into account, contact Revolution Finance Brokers directly on 0330 304 3040.
Investing in BTL Mortgages After Retirement
Over 65's are a growing sector as property investors, who are seeking ways to grow their retirement savings and invest in a new business proposition after retirement.
With lucrative returns and low eligibility thresholds, many retired investors find that the property market offers an ideal opportunity if they have retirement savings, and when property prices are low.
Affordability Calculations on Retiree Mortgages
A buy-to-let mortgage doesn't take into account pension income. So, a lender will consider the expected rental income from the investment property to calculate whether they think the lending is affordable.
Other criteria come into play, such as the loan to value ratio (i.e. how much is being borrowed against the value of the property) and any other relevant factors.
Can You Apply for a BTL Mortgage at Any Age?
It depends on the lender; many mortgage providers have upper age limits on residential mortgages. However, increasingly, lenders are taking the view that age isn't a defining factor in whether a new investor can afford to repay a buy-to-let mortgage.
Typically, the view taken is that at:
- Sixty-five years old: age isn't a significant factor and provided applicants meet other eligibility criteria and can reasonably expect to generate rental income that will comfortably cover the mortgage repayments, there aren't many reasons for an application to be rejected.
- Seventy years old: the number of available lenders drops, as some providers have an age limit of 75 which means they can only extend short term lending. The critical factor is whether you would be able to repay the borrowing in full within that time.
- Eighty years old: you're most likely to be successful with a specialist lender as often the maximum limit is for applicants aged 85. That doesn't mean to say you can't secure BTL lending but does mean that your best bet is using a specialist mortgage broker who understands the market and can negotiate borrowing on your behalf.
Revolution Brokers represent multiple retired landlords and work with our network of lenders to establish the most favourable terms on the market.
Contact us if you are looking for BTL lending past retirement, and we will advise on which lenders are most likely to consider your application.
How Important is Age in Applying for an Investment Mortgage?
In the past, many lenders put an age cap on landlord lending, and even retirees without any debt or any mortgages would find their applications rejected.
Still, some lenders have a maximum age limit, and others will ask more details about the health of applicants to consider life expectancy calculations.
Many lenders will be happy to lend, but with a maximum borrowing term, depending on the age of the applicant and how much they wish to borrow.
Which Factors Impact BTL Affordability for Retirees?
Each lender will assess an application differently, but some of the main factors aside from age include:
- Whether you have bad credit: each lender has their own stance, but having a bad credit history can make it more difficult to secure lending. BTL mortgages are usually interest-only, so poor credit doesn't necessarily mean that you won't be able to secure a mortgage.
- The size of the loan: some lenders are happy to lend high values, and will consider your age, health, and the investment strategy when looking at lending a larger amount. If you can demonstrate a good return over a short period, there is no reason you cannot apply for a considerable mortgage value.
- Type of property: any non-standard property is more difficult to borrow against. That is because it is always higher risk if you are investing in a timber frame home, or rental property with a thatched roof, as examples. Some lenders specialise in non-standard properties, so it is still possible to obtain a mortgage.
Why Is It Important to Use a Buy-To-Let Mortgage Broker?
A broker is always the best bet when it comes to any sort of mortgage. Revolution Brokers are independent, and thus have access to the whole of the market without being tied into any particular lender, bank, product or scheme.
That means that we consult with each client to get a thorough understanding of your requirements and circumstances, and can negotiate with the best lenders to secure the funding you need.
Contact the Revolution BTL mortgage team today at email@example.com.