Jeni Browne discusses why buy to let lenders impose age restrictions on borrowers. She also looks at which lenders can help older borrowers.
Last week saw The Mortgage Works make a monumental change to its lending policy – previously you could apply for a buy to let mortgage aged 84 and below and it could run to your 90th birthday. Now, there is no maximum age on when the mortgage can be repaid, but you can be no older than 70 when it starts. And no, I have no idea where the logic is in this.
This worries me. A large number of our clients fall into this group, having accumulated over the years very successful property portfolios which now provides them with valuable income. Yes, these properties may have a mortgage but it doesn’t mean that they aren’t money spinners.
Most buy to let mortgage lenders impose a maximum age of 75 on maturity of the loan. A lot of people have mortgages which end at this point and it doesn’t make sense for them to simply sell up and repay the mortgage, as the yield on the capital in the property is far stronger than what could be achieved in a savings account.
The good news is that there are still, a number of options. Keystone Buy to Let Mortgages will go to age 85, as will Aldermore Mortgages and Kent Reliance. The Leeds and Mortgage Trust will go to 80 and then really you are into the age 75 bracket. It’s also worth noting that the minimum mortgage term is five years so, essentially, you need to knock six years off the maximum age at the end of the loan to work out the maximum age on application.
MMR is placing focus on lending into retirement with which I concur; it makes sense on one’s own home. But on buy to let, I am struggling to see the logic. A maximum age of 75 at loan maturity is going to become a real problem for landlords particularly as 75 really isn’t very old these days. I do hope that the buy to let lenders begin to realise this and relax their age limits, but for now, when you are doing your financial planning, this is really worth taking in to account.
If you want to discuss this further you can call me directly on 01732 471647, or speak with any of the team on 0845 3456788.