Buy to let mortgages for over 65s
Age restrictions on mortgages removed
In the past it was extremely difficult for borrowers over 65 to get mortgage finance for residential property or buy to lets (BTLs). Banks and building societies were worried about how you would repay the mortgage once you were retired and no longer earning a salary.
The cut-off point for being considered for a standard 25-year mortgage was your 50th birthday.
But “retirement” looks very different now, with many people continuing to work full or part-time well into their 60s and 70s, and older, as well as embarking on new investment careers.
And since April 2015 older people have had more flexibility over what they can do with their retirement savings, when new pension rules were introduced by the UK government.
More over-65s investing in buy-to-lets
Commentators are talking of “the age of the silver landlord” as increasing numbers of older borrowers are investing in the buy-to-let (BTL) sector, according to recent figures from Commercial Trust.
New rental property purchases by over-65s 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%.
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 BTL mortgage products available for older borrowers
The trend for buy to let investment by the over-65s 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 anyone up to the age of 65 to apply for a full 20-year buy to let mortgage.
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 borrowers to be aged 85, and above, at the end of their mortgage terms, 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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