Buy to let mortgage for retired people

More pensioners investing in buy-to-lets

Commentators are talking of “the age of the silver landlord” as increasing numbers of over-65s are investing in the buy-to-let (BTL) sector, according to recent figures from Commercial Trust.

The number of people aged 65-75 applying for buy to let mortgages in 2018 was up by 5.43% compared with the previous year.

New purchases by over-55s accounted for almost 30% of Commercial Trust’s figures for 2018: an increase of 8% over the previous year.

And across all buy-to-let purchases and remortgages, over-55s accounted for 39% of all business, an overall increase of 4%.

New BTL mortgage products available for older borrowers

The trend for buy to let investment by older people has been recognised by lenders, with many of them increasing their maximum ages for buy to let mortgage applications, or the maximum age permitted at the end of term.

In spring 2019 one major high-street lender has increased the maximum age at end of mortgage to 75 to 85 years – allowing a 65 year-old to apply for a full 20-year buy to let mortgage.

Previously the maximum age at application was 50.

Another allows borrowers to finish a mortgage at 110 years old, while other lenders have no maximum age criteria at all.

Plenty of mortgage deals to choose from

Consumer magazine Which? found that that, in 2019, 65% of the buy to let mortgages on the market allowed maximum ages at the end of term of 85 and above, and 9% have a maximum age of 95.

One-fifth of the BTL mortgages offered have no maximum age at all.

Lower rates offered, smaller deposits required

At the same time there has been a trend in the mortgage market towards offering very long-term mortgages: up to 40 years.

Longer mortgages offer substantially cheaper monthly repayments (the same amount of money is repaid over a longer time-frame), which can be very attractive for older borrowers on fixed incomes.

However, the overall cost of the borrowing is substantially higher, with the (lower) interest being charged over a much longer period.

There are also an increasing number of buy to let mortgage deals available to buyers with smaller deposits. The standard BTL deposit required used to be 25%, but in 2019 a number of mortgage lenders are offering deals to investors who are able to put down only 20%, or even 15% deposits.

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