Releasing some of the wealth in your home is always going to be a difficult choice. However, if you have a buy-to-let property, you can take a portion of the equity out of your home with a later life buy-to-let mortgage. If you are a landlord, you can then release equity and turn it into cash that you can then spend how you like.
You could decide to make home improvements, provide this money to your family or perhaps spend it on healthcare. You could even use it in your retirement fund to repay an existing buy-to-let mortgage that you might have already released money from.
One of the biggest benefits of doing this is that you will still own the property. This means that you still get the rental income from the home. You will even benefit from any potential increase the value of the home as well.
How Much Equity Can You Release?
This will depend on both your age and the value of your property. Typically, you will need to be 55 or over to access this option. You will also need a property that is valued at over £70,000. It should also be let on an assured shorthold tenancy.
How Do You Pay It Back?
When you borrow, you will have a total amount as well as charges and interest. This is usually paid back when you pass away and traditionally will be completed through the sale of the property.
It will be your choice whether you want to make flexible payments on the capital as well as the interest that you take out on the property. You can pay this off monthly or on any set schedule, you like. This is completely flexible to match your budget and your schedule. Alternatively, you can make no interest payments and let it roll up.
Since you don’t have to make any payments, you also won’t be required to complete an affordability assessment. You will also not be required to meet a minimum income standard on the home.
You also have flexibility with how you withdraw the money from the home. You can take a lump sum up front and have the option to return to borrow more from your property later on.
You can get a later life buy-to-let mortgage with a no negative equity guarantee. This means that you will never owe more than the property is worth. It also ensures that no debt will be passed onto the relatives at the conclusion of the mortgage. You can also allow tenants to keep living in the property as normal.
Is This A Lifetime Mortgage?
This product is not a lifetime mortgage. Instead, they are considered a later life buy-to-let mortgage. You can only gain these through a financial advisor. A financial advisor will ensure you are aware of all the differences. You will also gain more detailed information, specifically related to your personal circumstances.
We hope this helps you understand all the information about buy-to-let mortgages and whether this could be the right choice for you and your property.