Research and reports
Older borrowers are no longer facing the age restrictions they once did if they want to invest in property.
When applying for either a standard mortgage or a buy-to-let mortgage, over 60s can sometimes find the process a bit more difficult.
This is because many lenders will have their own age limits, even though there’s no legal maximum age limit for applying for a mortgage.
This doesn’t mean over 60s can’t get a mortgage. But lenders might impose an age limit for taking out the mortgage, plus a maximum age for when the mortgage term will need to end.
When it comes to buy-to-let, retired borrowers may have previously found it difficult to secure a mortgage to purchase a buy-to-let property.
Lenders were reluctant to offer them finance, particularly if they were still in debt in their retirement.
But as the official retirement age has increased, lenders have become more relaxed about the restrictions they impose on borrowers.
For example, one of the main buy-to-let lenders TMW, which is part of Nationwide Building Society, says it doesn’t have any niche products for the over 60s.
This is because its core range of buy-to-let products is open to all those who are aged up to 70 years old at the time of application, and that the maximum term is 35 years.
It means that someone could still potentially have a buy-to-let mortgage in their 90s so long as they had applied for the product before they reached 70 years old. Some lenders have no age restrictions at all.
It follows the retirement age increasing from 65 for both men and women to 66 in October 2020 and 67 between 2026 and 2028.
Some lenders might consider retirement an issue because income tends to be lower at this stage in life. Lenders need to know that you can repay the mortgage.
However, income is less important for a buy-to-let mortgage compared to a residential mortgage.
This is because a buy-to-let mortgage is paid for by the rents that it provides – and lenders use this rental income to determine if a borrower can afford their buy-to-let mortgage.
Most lenders require the monthly rent to cover the monthly mortgage payments by between 125 per cent and 145 per cent. This is known as the rental cover.
Lenders focus far more on this rental cover rather than the age of a borrower when it comes to whether a buy-to-let investment is affordable or not.
And as long as older borrowers are looking to buy an investment where these rental cover figures add up, they should have access to finance – although they may need to use a mortgage broker to find the right deal for their individual circumstances.
It comes as the number of buy-to-let products available on the market is at its highest level since the beginning of the financial crisis in 2007.
The number of buy-to-let products available currently stands at 2,396, having risen by 21 per cent since June last year.
Many of these products will be available to landlords requiring finance, regardless of their age.
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