Ageism in BuyToLet mortgages? Myths dispelled

by Neil Patterson

11:51 AM, 31st July 2012
About 6 years ago

Ageism in BuyToLet mortgages? Myths dispelled

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Ageism in BuyToLet mortgages? Myths dispelled

Chances are that when you reach your 70’s your BuyToLet lender will expect your mortgage to be repaid but is this ageism in BuyToLet mortgages justified and are there any BuyToLet mortgage lenders taking an alternative view?

This is a question that’s been filling my business partners email inbox this morning. Well if you are into or approaching your 70’s I have some very good news for you!

I’ve done some initial research and there are several lenders that will provide buy to let mortgages with an expiry term well beyond early to mid 70’s. You will need to shop around though and we strongly recommend you use the services of a competent mortgage broker to do that for you as many of the lenders offering such facilities prefer only to deal with a small panel of professional intermediaries.

The risks to a lender in terms of BuyToLet funding is very different to them providing personal mortgages when you think about it. Usually a person’s income falls when they decide to retire so it makes a lot of sense for lenders to insist on a personal mortgage being paid well before retirement. A BuyToLet mortgage is different though.  Rental income is not affected by the retirement of a borrower. These mortgages are based on far more simple commercial rules, i.e. the rental income pays the mortgage interest and the costs of property ownership and it’s far easier for a lender to take possession of a property and sell it to recover the loan in the event of mortgage payments not being made. Why therefore is ageism in BuyToLet mortgages an issue?

Lenders with little if any Ageism in BuyToLet mortgages criteria

Aldermore – will lend to age 85, maximum term 35yrs, maximum ltv 80% – no minimum income requirements (unless client is a first time landlord where the minimum is £25,000) however proof will be required to show an income to cover personal outgoings and rental voids.

The Mortgage Works– will lend to age 90, maximum term 35yrs, maximum ltv 80% – TMW says no proof of income required, however all good Financial Advisers will carry out their own affordability checks to see that clients can cover personal outgoings & rental voids.

Woolwich BTL – No maximum age but maximum term 25yrs, maximum ltv 75%, Minimum income £20k per annum.

Ipswich Building Society– same as Woolwich but no minimum income requirement.

Monmouthshire Building Society– No maximum age, 35 yr maximum term, maximum ltv 70%, Minimum income £25k per annum

This isn’t necessarily an exhaustive list but as you can see there are several options for the over 70’s and although there is other criteria to meet I feel this is a positive mix of lenders. I would urge you to seek professional advice though as one of these lenders is notoriously slow, others only deal with selected intermediaries and they all have their own little quirks. If you would like me to introduce you to an intermediary I’m happy to stake my reputation on recommending  please get in touch.

There are two ways to reach me; telephone Neil Patterson on 01603 489118 or email npatterson@property118.com We now have a complete section dedicated to articles, Q&A’s and discussions regarding exit strategies. For details please

 



Comments

Florance Kennedy

20:15 PM, 31st July 2012
About 6 years ago

I encountered this problem recently, allied with the fact that some lenders now have a MINIMUM loan amount AND also require a minimum income. Useful information, thank you.

20:58 PM, 19th May 2013
About 6 years ago

The Woolwich will not extend my BTL because I am 75.
They certainly practice Age Discrimination.
Thanks.
Tim.

Bill Morgan

17:06 PM, 21st April 2014
About 5 years ago

Hi,

If an elderly person had a residential mortgage and had never missed any payments and the term came to an end, and the bank said "give me back my money" and the elderly person replied "no ,I am quite happy to pay the mortgage as I always have but you can't have your money back until I'm dead as I can't find another lender..

What could the bank do about this situation and would they get the Court backing for an eviction?

Bill Morgan

21:36 PM, 21st April 2014
About 5 years ago

Could an elderly person keep a current mortgage lender happy, by offering to pay 5 years interest paymemts up front and then get an additional 5 year term . There would be no risk to the lender.

Neil Patterson

8:35 AM, 22nd April 2014
About 5 years ago

Unfortunately Bill they would have to pay it off the capital otherwise the bank would be accused of charging more interest than necessary.

Neil Patterson

8:37 AM, 22nd April 2014
About 5 years ago

Hi Bill,

Part of the Contract/mortgage is that the loan is repaid by a defined period. Yes they probably would in the current market force the issue to have the loan repaid.


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