Buy to Let Equity release from Retirement Advantage launched

9:18 AM, 23rd August 2017, About 7 years ago 1

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Retirement Advantage have launched their first Equity release products for landlords to gain access to their capital tied up in rental property for their retirement.

Retirement Advantage head of marketing, Alice Watson, said ” based on available data, we estimate there could be over £250 billion locked up in Buy to Let properties that landlords over 55 could access via equity release.

“Recent changes to tax rules have affected Buy to Let owners. The phasing out of mortgage interest tax relief began in April 2017, with the amount of relief available to landlords gradually being reduced over the next few years. That said, there remains a sizeable cohort of people in the UK who own Buy to Let properties.”

“The tax treatment of extra properties is changing and that explains in part why new buy-to-let purchases have fallen somewhat in recent months, but a boost for Buy to Let could be coming in the form of equity release.

“We have launched the first set of products which allow owners of Buy to Let properties to release equity from those homes they let out. Property remains an attractive asset class overall and with the ability to unlock wealth from multiple properties now available, equity release could be just the boost the buy-to-let market needs.”

Basic Criteria for products:

Min loan amount £10,000
Max loan amount £750,000
Min age 55
Max age 90
Min property value £70,000
Max prop value £6 million
Available in England, Scotland and Wales
Not for purchases
Multiple property loans allowed

There are three products available:

Landlords Lifestyle Options – A one-off lump sum with no payments due. Interest is added to the loan monthly for the life of the loan. Annualised interest rate 6.24%

Landlord Interest Select Options – ability to choose to service some or all of the interest. The payment amount can be between 50% and 100% and the payment term can be from 5 years to the full term of the loan. Annualised interest rate 6.44%

Landlord Voluntary Select Options – ability to repay up to 10% of the original loan amount each year without early repayment charges. Annualised interest rate 6.64%

However, HMOs are not permitted, the property can only be let as a single family dwelling and none of the following tenant types are allowed:

Housing Association
Companies
Students
Council
DSS
Family and related persons

Maximum Loan to Values available increase by 1% for every year above the age of 55 starting at 9%

Eg. Aged 55 max LTV = 9%, 60 = 14%, 65 = 19%, 70 = 24%, 75 = 29% and 80 to 90 years old the max LTV is 34%

Early repayment charges are fixed and applicable for the first 8 years product dependent.

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Comments

Mark Alexander - Founder of Property118

11:39 AM, 23rd August 2017, About 7 years ago

I expect a lot more of these products to become available over the next 10 years, and if/when they do they will be far more competitive.

If you compare the interest rates and age based LTV's on this product to traditional equity release products secured against private dwellings the terms currently being offered by Retirement Advantage to BTL borrowers are far from generous.

Nevertheless, it is encouraging to see one of my predictions coming true. Several years ago I predicted that equity release would eventually filter into the BTL market and could become an ideal exit strategy for landlords who want to maximise their cashflow in retirement.

This isn't the first BTL equity release, it was tried before a few years ago, but didn't really get off the ground. As the demographic of landlords continues to age, the demand for these products, and hence competition among lenders to fill that demand, will intensify in my opinion.

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