If you’re an older landlord, you may be concerned that lender age restrictions will limit your buy to let borrowing options. Below, we examine your options and how you can easily navigate this challenge.
An estimated 96,000 landlords will turn 65 in 2023, joining a group of almost one million already that age or over. In fact, the annual number of landlords retiring doubled between 2010 and 2022. What’s clear is that the community is ageing, with 51% of outstanding buy to let mortgages initially taken out between 1996 and 2007.
While it’s fair to say the buy to let sector could do much more to cater to the primary age group that makes up the landlord community, there are a few common misconceptions surrounding maximum age limits.
Buy to Let Mortgages for Older Landlords
Typically, there are three main reasons you may be looking to secure a buy to let mortgage when you’re older (when I say older, I mean 65+ when approaching or in retirement). It’s worth pointing out that these reasons are not exclusive to “older” landlords, and you may already be considering these options at 30.
Remortgaging: If you’re an existing buy to let landlord, you’ll likely remortgage your properties reasonably regularly to ensure you’re on the most cost-effective rate (among other reasons). You may find a new rate to help you maximise your profits.
Additional income during retirement: Many older landlords use rental income as a top-up income alongside their pension during retirement. While some may invest in a buy to let property before retirement, plenty decide to invest during retirement!
Inheritance: We’re living longer, which means you might come into inheritance later in life. We have many clients who still decide to use inheritance money to invest in buy to let property in their late 60s and 70s.
Can I get a mortgage after I retire?
The short answer is yes! Any potential problems caused by retiring when trying to obtain a buy to let mortgage are practical issues rather than general policy issues with retirees. For example, it’s not that you’re retired that’s causing the problem; it’s more likely that you no longer meet affordability thresholds because your income may drop due to retiring. If the lender is concerned your pension income won’t cover void periods, then this is where you’ll run into issues.
Of course, many buy to let lenders don’t have a minimum income requirement; they rely on their rental coverage stress tests rather than a minimum ‘backup income’. So, the slightly longer answer is still yes, subject to meeting the lender’s standard eligibility requirements.
How much deposit is required for a buy to let retirement mortgage?
For the most part, as long as you meet the criteria for a buy to let mortgage, your required deposit is the same as any other borrower. While a 60% LTV mortgage gives you access to the most competitive rates, 75% LTV is the most common and gives you plenty of choices.
However, it’s worth noting that some lenders slightly restrict maximum LTV based on age. One of the key lenders in the buy to let space requires borrowers over 70 to have all their properties at 65% LTV or lower. Fortunately, this lender has very competitive pricing, making it a strong contender for older landlords. So, as you approach 70, you may wish to reduce the leverage against your portfolio to 65% or below to take advantage.
Even if you’re on interest-only mortgages (like many landlords), as house prices rise, but your interest-only mortgages stay static, your portfolio should naturally reduce its leverage if you don’t continually remortgage to extract further equity. While you may wish to maximise leverage early in a portfolio’s life to help build it up, later, as you get to your 60s, you may want to get it in shape to continue past age 70 at the best possible rates.
What is the maximum age for a buy to let mortgage?
The majority of buy to let lenders now set their maximum borrower ages between 79-85 at the time of application, with 25 lenders allowing you to go to 85 at the end of term. Moreover, there are 17 lenders with no upper age limit at the point of application for personal and limited company applicants.
Limited Company lending for older landlords
It’s fair to say that lenders tend to be a lot more flexible with age if you’re applying through a Limited Company, as succession is much easier to plan for with an SPV structure. For one, you can add those you’d like to inherit your portfolio as shareholders or even directors ahead of time. In the unfortunate event that you pass away before you repay the mortgage (or sell off the property), ownership of the property and mortgage is already in place. From the lender’s perspective, this is a lot easier to manage and a much more risk-averse approach.
Discuss your next buy to let mortgage
Are you looking to secure a buy to let mortgage? Head over to our easy-to-use buy to let mortgage calculator to compare rates or get in touch with one of our BTL mortgage brokers.
