Age discrimination from buy to let mortgage lenders?

by Readers Question

21:32 PM, 26th July 2013
About 6 years ago

Age discrimination from buy to let mortgage lenders?

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Age discrimination from buy to let mortgage lenders?

Last year I was in the process of identifying a good interest only re-mortgage – nothing out of the ordinary – just over 55% LTV; bags of rental cover, clean title and excellent credit score – By the time I was ready to move I had reached 70 years of age and all of a sudden every option on the high street fell apart because of it.

The CML office told me it was unlawful for their members to discriminate in this way and that they shouldn’t do so; but in the next breath said they had no control over their members on this matter and couldn’t (most likely wouldn’t) say where to complain to

I eventually had to resort to a commercial mortgage where everything is substantially more expensive with no freebies like valuation; legals, etc.

I think I understand how this scenario came about (viz. on the back of Central Gov’s fear of a interest only bubble in the residential market) but for it to cross overto BTL is sad and of course discriminatory.

By the way, I’ve been a Landlord for over thirty years (12 tenancies) – do everything myself; never had to evict; and seldom had a problem with arrears (touch wood)

Cheers

Mike Jones Age discrimination from buy to let mortgage lenders



Comments

Mark Alexander

21:37 PM, 26th July 2013
About 6 years ago

Hi Mike

Thanks for writing in now but why on earth didn't you do so when you were in your hour of need?

I could have helped.

There are quite a few buy to let lenders out there offering new loans to applicants in there 70's.

The ageism thing is a bit of an urban legend spread by hopeless brokers and landlords who get rejected by a handful of their existing contacts.

My business partner, Neil Patterson wrote a blog about this just about a year ago. It was a follow up to a series of articles I wrote about exit strategies after which I was bombarded with questions about mortgages for over 70's. Please take a look at this link >>> http://www.property118.com/ageism-in-buytolet-mortgages/30658/
.

Mike Jones

9:43 AM, 28th July 2013
About 6 years ago

Thanks for that Mark

I re-mortgaged in May this year

I didn’t see Neil Patterson’s piece but it makes no difference because it was published a year ago at around the same time that I began looking around – At that time I identified all the names put forward by Neil (and in fact a few others) – but if you care to re-check I think you will find that unless there has been recent changes of heart Woolich, Ipswich, and Monmouthshire all changed their criteria shortly afterwards – TMW wouldn’t do a purpose built block of three flats on one freehold and Aldermore is in the same category as my new lender Shawbrook (commercial / unregulated and expensive).

The purpose of writing was not to seek help for my individual needs (I’m already set up with this one now) but to raise the issue of ageism particularly in respect of those lenders who are breaking the law and discriminating in this way – they are the bogymen; and Neil Patterson’s reasoning is bang on target – there is no more risk (probably much less) in take on a experienced 70 plus BTL lender with a quality property than a new inexperienced entrant (of which judging by your forums there are many), or indeed the low quality properties to which many Landlords are much more attracted for the potential higher returns (as witnessed on TV just recently).

Howard Reuben CeMap CeRER

8:35 AM, 29th July 2013
About 6 years ago

Hi Mike

Knowing Shawbrook as well as I do (we are an approved Broker Partner), I know they are an excellent lender and have a fantastic range of options where ‘typical’ BTL lenders sometimes don’t venture. I also know Aldermore extremely well too (http://www.property118.com/brokers-review-of-aldermore-banks-buy-to-let-mortgage/36124/), and they do indeed brilliantly assist Clients who have now reached 3 score years and ten. And I totally concur that these two Firms have similar rates – if you need to go to them and compare against them.

However, as a professional whole of market BTL mortgage adviser I can also provide insight into many other ‘traditional’ BTL lenders who offer typical ‘high street’ deals for mortgages for the ‘over 70’s’ as well.

For example, here is a generic list of results based on a hypothetical case scenario;

Property value £200,000
BTL mortgage £100,000
Interest only
Example Client current age 72
2 year special offer deal
Maximum lenders arrangement fee £1,000
Maximum interest rate 4%
Table below is the ‘top ten’ deals sorted in ‘total to pay’ (TTP) order

Type Initial Rate Initial Pay Period Lenders Arrangement Fee TTP LTV
D 3.49 291.70 2 Years 299.00 7,001 75
D 3.29 276.36 2 Years 999.00 7,232 70
F 3.39 285.31 31/10/15 995.00 7,342 60
F 3.40 285.60 30/09/15 999.00 7,453 70
F 3.40 285.60 31/10/15 999.00 7,453 70
D 3.65 306.60 2 Years 999.00 7,801 70
L 3.85 320.83 2 Years 0.00 7,925 65
F 3.59 301.56 31/08/15 999.00 7,954 60
F 3.74 311.67 31/10/15 0.00 7,975 60
L 3.95 329.17 2 Years 0.00 8,125 65

The table includes 5 different lenders, all of which most BTL lenders would have heard of, including regional building societies, too.

From no.1 above to no.10 there is only an interest rate differential of just 0.46%, but even that makes a difference in underlying cost of over £1,000 for the same level of borrowing over the same term. Consider if you are paying well over 4.5%pa and so you see how the ‘wrong choice’ can be far more costly than it needs to be.

And likewise, using the “hopeless brokers” as Mark refers to them above, can also be an expense you don’t need to lay out either. Why go to an ‘expensive’ lender when a (true) whole of market Broker can source deals such as those above?

The moral of my reply here for all readers who are concerned about their BTL mortgages ending soon and need them to be extended into their 70’s, 80’s or beyond, is to always shop around using a professional ‘face to face’ Broker who can get to know you and understand your needs and requirements and who can source the full range of direct, as well as Broker only, BTL mortgage deals …. whatever your age.

Howard Reuben CeMap CeRER

8:36 AM, 29th July 2013
About 6 years ago

Hi Mike

Knowing Shawbrook as well as I do (we are an approved Broker Partner), I know they are an excellent lender and have a fantastic range of options where ‘typical’ BTL lenders sometimes don’t venture. I also know Aldermore extremely well too (http://www.property118.com/brokers-review-of-aldermore-banks-buy-to-let-mortgage/36124/), and they do indeed brilliantly assist Clients who have now reached 3 score years and ten. And I totally concur that these two Firms have similar rates – if you need to go to them and compare against them.

However, as a professional whole of market BTL mortgage adviser I can also provide insight into many other ‘traditional’ BTL lenders who offer typical ‘high street’ deals for mortgages for the ‘over 70’s’ as well.

For example, here is a generic list of results based on a hypothetical case scenario;

Property value £200,000
BTL mortgage £100,000
Interest only
Example Client current age 72
2 year special offer deal
Maximum lenders arrangement fee £1,000
Maximum interest rate 4%
Table below is the ‘top ten’ deals sorted in ‘total to pay’ order

Type Initial Rate Initial Pay Period Lenders Arrangement Fee Total to Pay LTV
D 3.49 291.70 2 Years 299.00 7,001 75
D 3.29 276.36 2 Years 999.00 7,232 70
F 3.39 285.31 31/10/15 995.00 7,342 60
F 3.40 285.60 30/09/15 999.00 7,453 70
F 3.40 285.60 31/10/15 999.00 7,453 70
D 3.65 306.60 2 Years 999.00 7,801 70
L 3.85 320.83 2 Years 0.00 7,925 65
F 3.59 301.56 31/08/15 999.00 7,954 60
F 3.74 311.67 31/10/15 0.00 7,975 60
L 3.95 329.17 2 Years 0.00 8,125 65

The table includes 5 different lenders, all of which most BTL lenders would have heard of, including regional building societies, too.

From no.1 above to no.10 there is only an interest rate differential of just 0.46%, but even that makes a difference in underlying cost of over £1,000 for the same level of borrowing over the same term. Consider if you are paying well over 4.5%pa and so you see how the ‘wrong choice’ can be far more costly than it needs to be.

And likewise, using the “hopeless brokers” as Mark refers to them above, can also be an expense you don’t need to lay out either. Why go to an ‘expensive’ lender when a (true) whole of market Broker can source deals such as those above?

The moral of my reply here for all readers who are concerned about their BTL mortgages ending soon and need them to be extended into their 70’s, 80’s or beyond, is to always shop around using a professional ‘face to face’ Broker who can get to know you and understand your needs and requirements and who can source the full range of direct, as well as Broker only, BTL mortgage deals …. whatever your age.

Howard Reuben CeMap CeRER

8:39 AM, 29th July 2013
About 6 years ago

Reply to the comment left by "Howard Reuben" at "29/07/2013 - 08:36":

typo "all of which most BTL lenders would have heard of" should read "all of which most BTL borrowers would have heard of"

apologies

(ps is there an edit facility available for spelling / typo / amendments where necessary?)

🙂

Mike Jones

12:41 PM, 29th July 2013
About 6 years ago

Reply to the comment left by "Howard Reuben" at "29/07/2013 - 08:39":

Hi Howard

With respect you and Mark both seem to be still missing the point

First of all I make it clear that I wasn't knocking Shawbrook or Aldermore for that matter

The point is that Age Discrimination is illegal - (I didn't need to check this out the person at the Council of Mortgage Lenders told me so when I called to ask why?) - this Illegal Activity is denying me (and others like me) access to (to coin your term) 'Whole of Market' and the industry generally seems quite content to go along with it.

Cheers

Mike Jones

Mark Alexander

12:49 PM, 29th July 2013
About 6 years ago

Reply to the comment left by "Mike Jones" at "29/07/2013 - 12:41":

It's an interesting point Mike, I had not looked at it that way. Age discrimination ranks equally now with race, religious and sex discrimination I believe?

It would be interesting to get a lawyers perspective on this point.

Howard Reuben CeMap CeRER

13:02 PM, 29th July 2013
About 6 years ago

Hi Mike

I'm a man of many words (when only one or two will do, quite often!) so maybe my reply to your query got lost in the war and peace above 🙂

My endeavour to answer your age discrimination point is to say that actually many lenders do NOT have an upper age limit, hence my statement "....... and who can source the full range of direct, as well as Broker only, BTL mortgage deals …. whatever your age."

Hope that clarifies that (in my own way) I did take your point fully on board and that to add to your point (wearing my mortgage brokers hat and to give 'light at the end of the tunnel for many BTL'ers in this forum) that there are solutions too - albeit that I do concur with you that 'generally' the industry is content to go along with it .... but there are exceptions that are available.

Mark Alexander

13:34 PM, 29th July 2013
About 6 years ago

I have posted questions in various legal forums on LinkedIn to ask lawyers and barristers to comment on the point of age discrimination.

I totally understand where Howard is coming from but Mike's point is that lenders which are discriminating based on age are breaking the law.

I'm not qualified to advise on Mike's point, although I do see very clearly where he's coming from now. It may well be that lenders think they have a basis to preclude lending to borrowers over the age of 70. However, what the difference in offering a 20 year term to a 65 year old and a 10 year term to a 75 year old?

If lenders are hoping to demonstrate that lending to people over the age of 70 is riskier, what's the difference between that and them saying that lending to people of a certain race, creed, colour, religion, gender or sexual persuasion is riskier and basing their lending criteria on that?

Risky business hey?

I'm interested in what the answer might be!

I wonder if people over 70 have a claim against the lenders who decline their buy to let mortgage applications on the basis of age alone?

If so, I can see that the ambulance chasers could have a field day!

In the meantime, might it not be a solution for some over 70's to transfer ownership to a younger spouse?
.

Neil Patterson

15:11 PM, 29th July 2013
About 6 years ago

If the CML did decide that Criteria based on age was Illegal and enforced Lenders to withdraw a specific maximum age being cynical I bet I know what the Lenders would do to get round it.

They would use the credit scoring system. No one is allowed to see how it works on a points basis so it can't be manipulated on an application.

EG you have to fill in date of birth on an application.
If your age is say 50 you get 100 points and aged 70 or above 1 point.

Hence you get declined for failing credit score without the real reason being disclosed.

If the CML fail to act on an open Criteria it would take them even longer to eradicate dubious credit scoring!

I am not condoning this, but as the Bank of England and the Government have failed so far to make Banks Lend more for the good of the economy I can't see Banks rolling over on this very quickly.

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