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Our property investment expert is Jeni Browne, Sales Director at
Mortgages for Business
www.mortgagesforbusiness.co.uk
Tel: 0345 345 6788
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Question
Getting into buy-to-let in later life
I am retired and in my late 60s. I have a house worth around £650,000 (based on my own assessment of the market, I have yet to get a valuation). I am thinking of releasing some of the equity from my home to get a buy-to-let mortgage on a property to let out. Is this possible? And can I get a mortgage at the grand old age of 66?!
Answer
The very good news is that, in the buy-to-let world, you are a spring chicken! Many lenders will be happy to lend to you until your 85th birthday with some not having a maximum age at all.
For the raising of funds against your home for deposit money, again, this is very doable, however, lenders will decide how much they would give you based on your income, and also factoring in any imminent reduction you will experience when you retire (assuming you have not done so already).
As you are looking to link two different mortgages into your new purchase, it would be advisable to speak to a broker who will be able to work the numbers in parallel to ensure everything stacks up for you.
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Question
Maximum number of borrowers
What is the maximum number of borrowers who can be on a buy-to-let mortgage? I am planning to get into a buy-to-let investment with my two brothers and my sister-in-law so there will be four of us altogether. I know a residential mortgage allows this number, but does this apply to buy-to-let? Also do we all need to be homeowners? One of my brothers is not, but he is likely to be supplying a large part of the deposit.
Answer
Many buy-to-let lenders will accept four applicants, although there are a few who limit the number to two, so whilst this will not be a deal breaker, it’s worth checking at the outset that the lender you are speaking to can accommodate this. It’s the same principle for your brother – most lenders will be fine that he is not a homeowner, however there are few who will not so again, it’s just worth checking this at the very outset.
At the risk of sounding like a broken record, a broker would be able to check all of this for you upfront, and ensure you get to the right lender first time, saving you the time and hassle of doing this yourself.
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Question
Getting a mortgage as a self-employed worker
I am a self-employed business owner, I own a residential property and I want to dip into buy-to-let as a way to invest for my retirement. However, I know from my experiences in getting my residential mortgage over ten years ago that lenders are not keen on self-employed borrowers. Is the same true for the buy-to-let market? If so, are there any specialist lenders you would recommend?
Answer
I think it’s a very common misconception that lenders (both residential and buy-to-let) do not like lending to the self-employed. What I would say is that self-employed income can be more complex than that of an employee and this is where confusion and trouble start to come into play. And so, for buy-to-lets, the majority of clients whom I work with are self-employed, and we do not struggle to place buy-to-let mortgages for them. Indeed, I cannot think of a single buy-to-let lender who precludes self-employed applicants from applying. So, you will be fine!
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Question
Letting fees ban and mortgages
Do you think the new letting fees rules will have an effect on buy-to-let mortgage rates? I have read, because landlords will now be liable for the fees, it will lead to hiked rents. I was wondering if this is likely to have a knock-on effect to mortgages.
Answer
The very short answer is no. Let me explain why. Mortgage pricing is not affected by legislative matters such as this – it’s linked to things like the Bank of England base rate, LIBOR, SWAP rates, lenders’ appetite to lend and market competition.
However, there is a chance that lenders could feel that higher letting costs need to be factored in to their affordability assessments (rental calculation) when deciding how much to lend the borrower and thus the amount you could borrow may be reduced. I would add that I have not heard of a single lender saying that they plan to do this, but hopefully this gives you the context of how the letting fee ban could potentially affect mortgages.
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