With rental demand increasing almost by the month at the moment it’s no surprise that many retired clients are approaching professional buy to let brokers to discuss the possibility of investing in buy to let property. However obtaining a mortgage in retirement does require some special considerations but some lenders will offer a buy to let mortgage with no age restrictions and there’s some great rates out there.
Product Choice for Retired Buy to Let Borrowers
For applicants with good credit histories, a large deposit (40% or more) and a healthy income a buy to let mortgage in retirement could be obtained from the Woolwich. They have some great buy to let rates for retired applicants and have no maximum age either at application or at the end of the mortgage term. You will be able to have your mortgage on either interest only or repayment.
For higher loan to values or more unusual situations – for example retired buy to let mortgages with a maximum age of 90 and no minimum pension income requirements can be obtained. Some of these will require experience as a landlord or a current residential property. To avoid any disappointment and to fully go over the costs and amount of rental cover that lenders require it is a good idea to approach a mortgage specialist early in the process. Typically however you would need to cover the mortgage by 125% or more – sometimes this is calculated at a higher rate for example 6%.
What Property Types Should Retired Buy to Let Applicants Consider?
One thing I’d strongly suggest is that since you are looking for a nice little investment property not a headache is that you steer away from any complex property types (unless you are an experienced property investor of course). Flats above shops, homes in multiple occupancy (HMO’s) and other unusual investment types all add complications to the process that you may wish to avoid.
A nice family/starter home with a small garden in a reasonable area offers both the prospects for growth and in the current climate where families are renting for longer (often up to 40 before becoming first time buyers) the prospect of finding longer term tenants. This kind of growth and stability would allow you to plan and grow your portfolio with confidence. I would also seriously consider the Rent Guarantee product we offer called Rent on Time. This will add further confidence that your cash flow will be uninterrupted by issues like tenant defaults and also reduce the stress of dealing with evictions as this will also be taken off your hands.
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Important Considerations
- Your adviser can search through all the specialist AND high street rates available to older applicants – remember this is extremely important as many high street lenders will not consider applicants over 65 or 70
- Planning your rent, rent insurance and property selection is important. Your adviser can make sure your costings are realistic and the deal you find is suitable.
- Whilst most applicants will want to pick a simple, profitable property, our specialists can assist with ALL major investment property types including semi-commercial and HMO’s.
