Buy to Let ownership in the UK can be a great way of generating generous and continuous revenues. Provided you have the means to cover the initial costs of purchasing a property, a Buy to Let property, rented to tenants can pay for the ongoing costs.
This is precisely why it is not uncommon for retirees to consider Buy to Let investments for post-retirement earnings. In fact, research suggests that the number of over 65s actively considering property investments is at an all-time high but how does the average lender view mortgage applicants who are aged 65 or over? What kinds of Buy to Let mortgages are available for this age group, and how does the application process differ?
Affordability Calculations on Retiree Mortgages
In most instances, lenders are not particularly interested in the pension income of retiree mortgage applicants however the higher the annual pension, the more products are available. Instead, the lending decision is based predominantly on whether the property will generate sufficient rental income to cover the mortgage payments and a buffer.
The credit history of the applicant may also be considered, as may their capacity to provide a relatively sizeable deposit. It is also likely that an assessment will be carried out on the applicant’s existing debts and outgoings, such as the outstanding mortgage balance, if any, on their current home.
If you have any questions or concerns regarding your eligibility for a Buy to Let mortgage at any age, consult with an independent mortgage broker at the earliest possible stage.
What Are the Age Restrictions on Buy to Let Mortgages?
Though there are significant differences between lenders, the following is typically correct in most instances:
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Sixty-five years old: Most lenders are willing to consider Buy to Let mortgage applications from individuals aged up to 65 and provided the applicant can provide evidence of sufficient rental income to cover the mortgage payments, there is a good chance of acceptance.
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Seventy years old: Many lenders impose a maximum age limit on all mortgage applicants. You would therefore need to demonstrate that you can repay the mortgage balance in full within a short period of time.
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Eighty years old: Many High Street lenders are unwilling to consider a Buy to Let mortgage application from a person aged 80, however, it is still perfectly possible to secure the funding you need with the help of a specialist lender, via an independent broker.
Irrespective of age, it is essential to seek broker support before applying for a Buy to Let mortgage as along with eligibility and affordability, lending decisions can also be influenced enormously by age.
To ensure that you get the best possible deal and stand every chance of qualifying for a Buy to Let mortgage, consult with a broker before applying.
Which Factors Influence Interest Rates and Overall Borrowing Costs?
As a rule, the higher the risk, the higher the overall borrowing costs of the loan. Age usually has a direct impact on Buy to Let mortgage competitiveness as younger, pre-retirement applicants can gain access to more competitive deals.
Other than this, there are three primary factors that will influence the interest rate quoted and subsequent monthly payments of a mortgage:
The key to getting the best possible deal irrespective of factors lies in comparing as many mortgages as possible from competing lenders. In addition, it is important to remember that some of the best deals available can often be sourced from specialist lenders you will not find on the High Street.
Once again, this underlines the importance of seeking broker support at the earliest possible stage. Arrange a complete market comparison with the help of a broker and access the objective advice you need to make a safe and informed decision.
For more information on any of the above or to discuss your requirements in more detail, contact a member of the team at UK Property Finance today.
Author: Craig Upton
