9:56 AM, 31st July 2012, About 10 years ago
Following my article regarding Landlord Tax Strategies, I’ve woken up this morning to a very full inbox. I will do my very best to respond to everybody but please bear with me.
Just to make it clear, I do not have a product to sell. My latest series of articles is written for the sake of sharing to help my fellow landlords to learn from my experiences and not to make the same mistakes as me. I retired from the mortgage business in 2009 and now live off the cashflow from my buy to let portfolio.
Question 1 – Is is possible to have a buy to let mortgage which expired beyond age 70?
Answer – Yes! There are several lenders which will provide buy to let mortgages to age 80, some even longer. However, all the ones I’m aware of insist on the mortgage being taken out before age 75.
Question 2 – Is it possible to finance an over 55’s retirement apartment to let out even if I’m under the age of 55 but I intend to let the property to a person over the age of 55?
Answer – Yes! All property is financeable but less lenders have an appetite for financing these types of properties as the re-sale market is smaller. Therefore, expect to pay a bit more for the funding. Most traditional buy to let lenders will refuse to lend on this type of property but there are banks and specialist lenders out there which can help.
Question 3 – How does your exit scheme work?
Answer – I don’t have a “scheme” as such. I simply have a plan which I intend to implement in 20 years time. Some specialist lenders are already offering mortgage products where interest rolls up. The downside is that your mortgage grows quite quickly as interest is charged on the capital outstanding which also includes the interest already charged and added to the balance. Therefore, you end up paying interest on interest. However, on the plus side, all of this interest can still be offset against rental profits. The facilities also come with a guarantee of no negative equity and the repayment date is on death. Therefore, even if you live to be the oldest person on the planet the mortgage will never need to be paid whilst you are alive. The beneficiaries of your will can rest assured that the outstanding finance will never exceed the value of the property on which the mortgage is secured, in other words the debt will never eat away at the value of other assets in your estate. The real attraction of this scheme to me is that I will retain 100% of the net rental income, have no direct debit from my bank account for the mortgage payments and yet still be able to offset the mortgage interest against rental income.
Question 4 – what would you do in my situation?
Answer – I’m always pleased to help if I can and I’m happy to introduce you to my professional contacts to help you to implement any strategies you like based on the guidance I offer. You need to understand though, I will ask you lot’s of questions, obviously I will respect confidentiality. The professional contacts I introduce you to will be insured to provide the specific advice your require, my input will be to discuss possible strategies and will not constitute advice.
There are plenty more questions but I will save those for another article.
If you would like to ask me a question by all means use the comments section below. However, given that your question may be personal in respect of your finances you may wish to email me instead – email@example.com
If you do send me an email please include answers to the following questions as well as the question you would like me to answer. This is the minimum amount of information I need before I can offer any suggestions or decide which of my professional contacts are best placed to assist you:-
1. Address(es) of your buy to let property(ies)
2. Realistic estimate(s) of the current value(s) of the property(ies)
3. The name(s) are your existing mortgage lender(s)?
4. How much is the rental income from your property(ies)?
5. What is your date of birth?
6. Do you have additional sources of income? – please describe
7. Do you own your own home? If so, what is the value of the property and mortgage outstanding?
8. What is your telephone number?