Buy To Let Mortgages For Over 70s
Buy to Let Mortgages for over 70s
Finding the right buy to let mortgage can often be difficult and strenuous, and it gets no easier the older you get. Many lenders now implement an upper age limit for taking out new mortgages, typically between 65 and 70. Therefore, if you are in your 70s and looking to secure a buy to let loan, you might be wondering what options are actually available to you.
Whilst obtaining a buy to let loan becomes more difficult as you enter your 70s, a good number of lenders do not see age as a barrier to getting finance. In fact some lenders have a maximum age of 110! There are still many opportunities available for over 70s to get a good deal on their buy to let mortgage.
If you over 70 and are looking for a buy to let mortgage, you may want to review some of the changes to the tax rules and regulations that have affected the buy to let mortgage market.
Buy to Let Tax Rules
Landlords can no longer deduct their finance expenses from their buy to let properties to arrive at their profits in a self assessment at the end of the financial year. Consequently, many landlords will see their tax bill increase heavily next year.
The new rules are directed towards private landlords and not at limited companies. Therefore, limited companies do not have to pay tax on their financial costs, as only their profits are taxed.
As a result, private landlords want to set up their own limited company to avoid the new tax rules. However, there are some associated costs that should be considered before setting up a limited company.
Buy to Let Regulation Changes
Due to the changes in how the buy to let mortgage market is regulated, lenders have altered the way they review applications for buy to let mortgages.
Landlords will be expected to provide details of their entire property portfolios, as lenders will now require an in-depth review of the landlord's portfolio. From 2017, lenders will no longer provide buy to let mortgages to landlords with one or more properties that are not profitable. Therefore, it is important to note that landlords can no longer spread equity across their property portfolio.
To ensure landlords can afford mortgage payments, lenders will apply a stricter income stress test. The stress test will look at the landlord's ability to afford mortgage payments in the event that interest rates increase to 5.5%.
Finally, landlords will need a rental coverage ratio of at least 145% for standard buy to let properties and 170% for houses in multiple occupation buy to lets. Landlords will be expected to provide a valuation from a professional surveyor to support their rental coverage ratio.
The additional 45% to 70% of the rental coverage ratio is there to act as a 'safety net' to account for any period of time that the property is without tenants.
What should I look for when searching for an over 70s buy to let mortgage?
Like any financial product, it is important to shop around and review all of the options available to you. When comparing different lenders you should consider the following factors.
- Lenders criteria and your eligibility
- Fixed rate vs. variable rate
- Rate of interest on the mortgage
- Fees charged by each lender
Gain Advice from a Mortgage Broker or Independent Adviser
Conducting your own research is vital when looking for the buy to let mortgage that suits you, however comparing the options available to you can often be overwhelming. That’s why it is often a good idea to contact a financial adviser to analyse your situation and give you assistance in achieving your mortgage goals.
If you think you may benefit from the aid of an independent mortgage adviser, you can fill in our online contact form to request a call back from our buy to let advisory team, who can provide you with a free initial consultation about mortgages. Alternatively, you can contact us directly on 0117 403 4222