Buy to Let Enters a ‘Silver Era’

As savvy investors are looking to enhance their retirement income through other non-pension means, there has been a rise in older landlords. Andy McOwat, senior BTL consultant, explores how buy to let lenders are reacting to this change in the market and what’s on offer for the over 70’s investor.

It’s a well-known fact that the population in the UK is getting older. According to the Office of National Statistics, the number of people aged over 65 will increase by over 40% within the next 20 years1 . With the number of people aged over 65 in work more than doubling since 20062, there has been a rise in people looking to acquire a buy to let property to help support their income in later life.

Historically, buy to let lenders have wanted the borrower to be no older than 75 at the end of the mortgage term. As the minimum mortgage term is usually 5 years, the borrower would need to be aged 69 at application. Due to this shift in demand, they are slowly opening the door to landlords of a more mature age which means that if you are 69 years of age or above, there are still many options available to you.

Individual applications

If you are looking to purchase property in your personal name, there are currently 11 lenders that will allow you to apply once you are 70, and 2 lenders who will allow you to apply up to age 79. They will also grant a term of up to 35 years, which in theory would take you to age 114 at the end of the mortgage.

Limited company applications

There are a number of lenders who will accept directors aged over 70 within a limited company structure. There are even some who don’t limit the age of the directors, so in theory, a director could be over 100!

In the limited company space, there are 6 lenders who will accept applications from those age 70 and above.

Rates

Regardless of whether you choose to purchase your property in your personal name or through a limited company, the rates available are comparable with the rest of the market, as are the arrangement fees and valuation fees.
Individual rates start at 1.49%, whilst limited company applications start at 2.69%. In all cases, we recommend that you take professional advice when deciding whether to use a limited company or not.

Individual Rates

1.49% fixed1  2 years 65% LTV Max term 35 years Arrangement fee £1995
2.05% fixed2  5 years 60% LTV Max age 80 Arrangement fee £1995
1.84% fixed3 2 years 75% LTV Max term 40 years Arrangement fee £1995
2.34% fixed4  5 years 75% LTV Max term 35 years Arrangement fee £1995


Limited Company Rates

2.69% fixed5  2 Years 65% LTV Max term 25 years Arrangement fee 2%
3.24% fixed6  5 years 65% LTV Max term 25 years Arrangement fee 2%
2.89% fixed7  2 Years 75% LTV Max term 35 years Arrangement fee £995
3.39% fixed8  5 years 75% LTV Max term 35 years Arrangement fee 2.5%

Rates accurate as at 17th May 2019

As lenders respond to the increasing demand of the ‘Silver Era’ of buy to let, we expect to see new products and products with changed criteria appearing. In this ever-changing market place, it highlights the importance of using a broker to make sure that you are getting the best product to finance your property.
If you are over 70 and want to explore your options, I am here to help you find the best product for you. Call me directly on 01625 416 396 or email me on andym@mortgagesforbusiness.co.uk



Sources
1 Office of National Statistics, (2017), Estimates of the population for the UK, England and Wales, Scotland and Northern Ireland, mid-2017 based
2 Office of National Statistics, (2018), Labour market economic commentary: September 2018

Small Print
1108592. Fixed at 1.49% for 2 years reverting to 4.74% (lender's standard variable rate + 0.25%). Maximum Loan to Value: 65%. Maximum Loan: £1,000,000. Typical Rent to Interest: 145% at 5.50%. Repayment Options: Interest only or capital & interest repayment. Overpayments: Up to 10% pa. Early Repayment Charges: 3% of the amount being repaid until the end of year 1, then 2% until the end of year 2 from draw down. Income Requirement: No minimum requirement. Lender Arrangement Fee: £1,995 added to loan. Standard valuation fee: Apply. Legal fees: Apply.

2108782. Fixed at 2.05% for 5 years reverting to 5.09% (Bank of England base rate + 4.34%). Maximum Loan to Value: 60%. Maximum Loan: £1,000,000. Typical Rent to Interest: 125% at 5.25%. Repayment Options: Interest only or capital & interest repayment. Overpayments: Up to 10% pa. Early Repayment Charges: 5% of the amount being repaid until the end of year 1, then 4% until the end of year 2, then 3% until the end of year 3, then 2% until the end of year 4, then 1% until the end of year 5 from draw down. Income Requirement: No minimum requirement. Lender Arrangement Fee: £1,995 added to loan. Standard valuation fee: Apply. Legal fees: Apply.

3109205. Fixed at 1.84% for 2 years reverting to 5.09% (Lenders standard variable rate). Maximum Loan to Value: 75%. Maximum Loan: £500,000. Typical Rent to Interest: 145% at 5.50%. Repayment Options: Interest only or capital & interest repayment. Overpayments: Up to 5% pa. Early Repayment Charges: 2% of the amount being repaid until the end of year 1, then 1% until the end of year 2 from draw down. Income Requirement: £25,000 minimum income requirement. Lender Arrangement Fee: £1,995 added to loan. Standard valuation fee: Free or £300 cashback. Legal fees: Free

4108576. Fixed at 2.34% for 5 years reverting to 5.24% (Lenders standard variable rate + 0.75%). Maximum Loan to Value: 75%. Maximum Loan: £500,000. Typical Rent to Interest: 145% at 4.50%. Repayment Options: Interest only or capital & interest repayment. Overpayments: Up to 10% pa. Early Repayment Charges: 6% of the amount being repaid until the end of year 1, then 5% until the end of year 2, then 4% until the end of year 3, then 3% until the end of year 4, then 2% until the end of year 5 from draw down. Income Requirement: No minimum requirement. Lender Arrangement Fee: £1,995 added to loan. Standard valuation fee: Apply. Legal fees: Apply

5109428. Fixed at 2.69% for 2 years reverting to 5.35% (LIBOR + 4.50%). Maximum Loan to Value: 65%. Maximum Loan: £1,000,000. Typical Rent to Interest: 145% at 5.50%. Repayment Options: Interest only or capital & interest repayment. Overpayments: No overpayments accepted. Early Repayment Charges: 3% of the amount being repaid until the end of year 1, then 2% until the end of year 2 from draw down. Income Requirement: No minimum requirement. Lender Arrangement Fee: 2% of loan amount added to loan. Standard valuation fee: Apply. Legal fees: Apply.

6109375. Fixed at 3.24% for 5 years reverting to 5.35% (LIBOR + 4.50%). Maximum Loan to Value: 65%. Maximum Loan: £1,000,000. Typical Rent to Interest: 145% at 3.24%. Repayment Options: Interest only or capital & interest repayment. Overpayments: No overpayments accepted. Early Repayment Charges: 5% of the amount being repaid until the end of year 1, then 4% until the end of year 2, then 3% until the end of year 3, then 2% until the end of year 4, then 1% until the end of year 5 from draw down. Income Requirement: No minimum requirement. Lender Arrangement Fee: 2% of loan amount added to loan. Standard valuation fee: Apply. Legal fees: Apply.

7108739. Fixed at 2.89% for 2 years reverting to 5.99% (LIBOR + 5.14%). Maximum Loan to Value: 75%. Maximum Loan: £500,000. Typical Rent to Interest: 145% at 5.99%. Repayment Options: Interest only or capital & interest repayment. Overpayments: No overpayments accepted. Early Repayment Charges: 4% of the amount being repaid until the end of year 1, then 3% until the end of year 2 from draw down. Income Requirement: No minimum requirement. Lender Arrangement Fee: £995 added to loan. Standard valuation fee: Apply. Legal fees: Apply.

8108642. Fixed at 3.39% for 5 years reverting to 6.03% (LIBOR + 5.18%). Maximum Loan to Value: 75%. Maximum Loan: £750,000. Typical Rent to Interest: 145% at 3.39%. Repayment Options: Interest only or capital & interest repayment. Overpayments: No overpayments accepted. Early Repayment Charges: 4% of the amount being repaid until the end of year 2, then 3% until the end of year 4, then 2% until the end of year 5 from draw down. Income Requirement: No minimum requirement. Lender Arrangement Fee: 2.5% of loan amount added to loan. Standard valuation fee: Apply.

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