Leek United Building Society Buy to Let with no upper age limit

by Neil Patterson

9:44 AM, 30th January 2014
About 7 years ago

Leek United Building Society Buy to Let with no upper age limit

Make Text Bigger
Leek United Building Society Buy to Let with no upper age limit

18 Months ago I wrote one of our most popular articles titled Ageism in BuyToLet mortgages? Myths dispelled

This article highlighted the ability to apply for Buy to Let mortgages beyond age 70 and which lenders you could consider. To this day I still regularly get calls from people who have just read the article and need help remortgaging into their retirement.

Now the Leek United Building Society is the latest lender offering a Buy to Let mortgage with no upper age limit (see product details below)

The risks to a lender in terms of Buy to Let funding is very different to them providing personal mortgages. 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 Buy to Let 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 should ageism be an issue for Buy to Let?

Leek United Product details:

  • 3.99% 2 year discounted variable (SVR currently 5.19% minus 1.2%)
  • Maximum 75% LTV
  • Fees £199 payable up front
  • 3% early repayment charge for the first 2 years
  • No Flats, Maisonettes, HMOs, Student lets or DSS lets
  • Stress tested at 125% interest cover on the pay rate – allows you to borrow up to  240.60 times the monthly rental income (subject to 75% LTV maximum)
  • Min Loan size £75,000, Maximum loan size £500,000
  • Minimum applicant income required £20,000 but this can be pension income
  • Maximum portfolio 20 properties
  • Only available in England and Wales

If you need any help there are two ways to reach me; telephone Neil Patterson on 01603 489118 or email npatterson@property118.com

Or if you would like to add your own requirements and search for the most popular available Buy to Let products please click here ageism

Comments

Howard Reuben CeMap CeRER

9:53 AM, 30th January 2014
About 7 years ago

"Why therefore should ageism be an issue for Buy to Let?" I agree with your sentiment exactly ... and also so do many of our Clients who are currently in their 60's, 70's and 80's too!

Leek Utd BS is one of those excellent smaller lenders who provide support to experienced BTL'ers in this regard and with no maximum age limit at all (although for First Time Buy To Let'ers is on a case by case basis) this is a godsend.

Not only that but our BDM is also excellent and so supportive helping us to help our Clients get cases through.

By the way, the definition of 'experienced landlord' as far as LUBS is concerned is simply that someone already has to own one BTL.

As usual also, this product allows 10% overpayments each year, too.

Mark Alexander

10:15 AM, 30th January 2014
About 7 years ago

This is fantastic news for BTL borrowers in their twighlight years such as my parents.

Early responses on Twitter are also very positive:-

My tweet ...

Immediate responses ...

Let's get a Twitter discussion going to spread the word, please RT 🙂
.

DC

11:02 AM, 30th January 2014
About 7 years ago

Another step in the right direction but as Neil has already said BTL mortgages should not be considered in the same way residential mortgages are so why are lenders insistent on minimum individual income limits that many 60, 70 and 80 year olds don't achieve?
There are still only a very limit number of lenders that are truly not ageist so to any of you other companies out there that subscribe to this and other landlord forums, if you are interested in maximising your business, give us something to really get excited about!

Mark Alexander

11:59 AM, 30th January 2014
About 7 years ago

Reply to the comment left by "DC " at "30/01/2014 - 11:02":

I think a minimum income level is relatively prudent as a base level criteria, especially if this is followed up with some common sense underwriting.

For example, if a person who earns £25,000 a year has credit commitments which cost £20,000 a year, other than their BTL mortgages, they are not likely to be a good credit risk.

Frankly, anybody earning less than £20,000 a year is living on the breadline and should not be a landlord in my opinion.
.

Ian Ringrose

12:13 PM, 30th January 2014
About 7 years ago

Do I do my planning now assuming that in 20 or 30 years time there will still be lenders that will lend regardless of age?

I hope the minimal income of £20K includes profits from letting, as lot of landlords are planning to have very little pension income but lots of rental income. I would not say that £20k was living on breadline if someone has money in the bank and has no mortgage costs on their home.

Mark Alexander

12:23 PM, 30th January 2014
About 7 years ago

Reply to the comment left by "Ian Ringrose" at "30/01/2014 - 12:13":

That's a good point Ian, to add to my comment regarding income, I was referring to taxable income from whatever source.

So far as exit strategies are concerned, I always advise people to plan for the worst and then continually seek out better alternatives. These alternatives will change from time to time, for example, equity release on BTL was available last week, this week it isn't. Who know's how long the Leek United BS product will be around, never mind what will be available 20 years from now.

Worst case scenario is premature death, I've got that covered - see >>> http://www.property118.com/landlords-life-insurance-strategy-and-calculator/

Next strategy is minimising tax if I need to sell and financing beyond retirement age, see >>> http://www.property118.com/how-to-become-a-landlord/60765/
.

DC

15:11 PM, 30th January 2014
About 7 years ago

Reply to the comment left by "Mark Alexander" at "30/01/2014 - 11:59":

"Frankly, anybody earning less than £20,000 a year is living on the breadline and should not be a landlord in my opinion."

I normally go along with most of your ideas and advice but on this occasion I disagree with your opinion Mark. I think you need to take a reality check.

Lots of landlords have the potential to earn in excess of £20k but cannot include it as earnings when applying for mortgages without setting up as a business.

I know responsible property investors/landlords that receive an income or pension below £20k, do not have massive financial commitments such as residential mortgages, outstanding finance or crazy credit card balances and derive a fairly decent income from their property investments but cannot use that as evidence of income; my parents fit the bill. Conversely I also know many high income earners that I wouldn't trust as Monopoly bankers let alone consider as responsible persons to lend money to!

What about those responsible persons that have a decent sum of savings available but earn below the minimum income level?

Why does it have to be so black and white? What happened to the good old days of going to see the bank manager who would consider your individual circumstances before deciding whether to lend or not? Why is a single man with a salary of £20k a better bet that a couple with a joint income of £39k (split 50/50)?

Paul Eastabrook

16:01 PM, 30th January 2014
About 7 years ago

On a related issue to that of pure ageism, I experienced a similar prejudice when dropping by a branch of my residential mortgage provider who were offering competitive BTL deals for the first time (this was when the West Bromwich thing suddenly blew up in all our faces). After an enthusiastic start, I was told that if I wasn't earning from paid employment then I wouldn't be eligible to apply. This was despite having a substantial income for 2013-14 and ex-employer pension earnings well in excess of the earnings requirement beyond then. Age too was well inside the specified criterion.

There seemed no earthly reason for the discrimination, other than "the computer says no".

Mark Alexander

16:17 PM, 30th January 2014
About 7 years ago

Reply to the comment left by "DC " at "30/01/2014 - 15:11":

Please see my second comment, I did say "taxable earning from whatever source".

That includes employment, pensions, annuities, benefits, deposit interest, self employment, declared rental and investment income amongst other.

How anybody can enjoy a reasonable lifestyle with taxable income less than £20,000 per annum is still totally beyond me, unless of course they are up to something shady and not declaring their income. Savings are fine but they will run out at some point and if you have no income at all and enough savings not to worry about running out of money over the life of a mortgage then you probably have an income of over £20,000 per annum too, if only from the interest on the savings!

I stand by what I said in my first comment and added to in my second comment on this issue. We don't have to agree on everything 🙂
.

Ian Ringrose

17:08 PM, 30th January 2014
About 7 years ago

Mark,

Income may be not taxable because:
a) There are lots of tax losses from past years. Could be easily the case for a landlord that recently brought and did up lots of properties with mortgages that have large upfront charges.
b) The income may be exempt from UK income Tax, e.g. some people that used to work for the US air force.
c) Taking money out of a life policy that counts as a return of capital.
d) Income from ISAs (some people have over 1,000,000 in ISAs!)
e) Income from VCTs
f) Capital element of purchased life annuities (e.g annuities not brought with a pension pot)

Also taking pension can be delayed until savings start to run out, likewise paying profits out from a company under your control. Both of these can be a good move in any year when someone is expecting lots of capital gains
.
I had the above explain to me my by a charity gift aid administrator, a small charity had most of the above stopping at least one donor from using gift aid.

1 2

Leave Comments

Please Log-In OR Become a member to reply to comments or subscribe to new comment notifications.

Forgotten your password?

BECOME A MEMBER

How to triple your rental profit with HMOs