More Retirees Than Ever Are Investing In Buy-To-Let
More over 65s than ever are investing in buy-to-let, new figures have shown.
Mortgage broker Commercial Trust has documented a 5.43% increase in BTL mortgage applications by those aged 65-75 in 2018.
The data from Commercial Trust shows a 4% increase in the proportion of buy-to-let purchases and remortgages from over-55s, who now account for 39% of all buy-to-let mortgage activity.
For purchase-only applications, over-55s were responsible for almost a third (29.7%) of all business in 2018, which is up by 8% year-on-year.
Mortgage lenders have recently raised their maximum age at the end of the mortgage term criteria from age 75 to 85. This is thought to be the primary reason for the boom, in addition to a recent fall in house prices across the country seeing those in an older age bracket, with savings, equity and disposable income to spare, take advantage of the bargain.
Needless to say and whatever the reasons behind it, the trend of those becoming landlords in retirement and older age is an interesting one given the common perception of landlords being younger individuals. Indeed, it makes sense. The rental market can be profitable and is generally a safe investment. It seems more and more retirees are utilising it to fund a desirable lifestyle during retirement.
Have you had more BTL retirees enlist your help?
Here are some BTL facts to convey to your landlords-to-be:
What is a BTL Mortgage?
Just as the name suggests, if you are buying a property to rent out to tenants for a profit, you must get a buy-to-let (BTL) mortgage. Of course, a mortgage being when a bank or lender gives you money, which you must repay (in monthly instalments usually over a period of several years), to purchase a property such as a city flat or house in the suburbs. BTL mortgages, while offered by various banks and building societies, are traditionally more expensive than a standard residential mortgage, with less favourable fees and rates, because they are considered higher risk. That’s not to say that you cannot secure a great deal, but you should shop around and perhaps enlist expert advice before locking anything in.
How are BTL mortgages different to regular mortgages?
As explained above, there are different conditions associated with a BTL mortgage, which does mean your repayments and rates might be less favourable than a traditional residential mortgage, given a BTL mortgage must be secured against the additional risks.
If you want to take out a BTL mortgage, you’ll also need a higher deposit than you’d need for a residential mortgage - at least 25% and often up to 40% (the best deals often require you to have a bigger deposit).
If you are unsure about which mortgage is best for you, check with a mortgage advisor.
What is a HMO?
HMO stands for ‘House in Multiple Occupation’ AKA, in more common words, a shared house or flat, in which you live with, and share facilities with, people that you aren’t related to.
A property is a HMO if:
- at least 3 tenants live there, forming more than 1 household
- you share toilet, bathroom or kitchen facilities with other tenants
Many landlords are choosing to invest in HMOS, because they can offer a great return on profit. However, the legal side can be tricky, so best speak with a qualified conveyancer or property solicitor if you are considering this type of investment.
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Content correct at time of publication