Research and reports
Whether you’re looking for extra cash to fund your retirement or need to make urgent repairs to your property, equity release can be an alternative to remortgaging.
Read on to understand what equity release for landlords is, who can use it, and the risks involved.
Equity release is a way to access money after you’ve built up capital on your investment property.
For buy-to-let landlords the way to do this is through a lifetime mortgage – but you have to be over 55 years old.
A lifetime mortgage allows you to borrow a proportion of your property’s value, and you’ll pay interest on that loan.
You could want to access cash this way for a number of reasons. Maybe you’re thinking about retirement? Or perhaps you need a short-term injection of cash to fund essential repairs and maintenance?
Depending on your financial situation, you should consider whether selling up would be a better option to access funds, as the amount of debt you owe can increase rapidly over time.
Another way to release equity is through remortgaging. Read our guide to find out how to remortgage a buy-to-let.
It’s important to discuss your options with a broker or financial advisor so you fully understand what’s available to you.
When it comes to equity release on rented property, your options are limited. There are a number of providers that offer an equivalent of a lifetime mortgage for landlords, but some will only offer plans for residential homeowners.
If you have a portfolio of properties you may be able to release your combined equity across all of them.
As we’ve already mentioned, you’ll need to be over the age of 55 to qualify for a lifetime mortgage. And if you’re releasing equity this way, you won’t usually have monthly repayments. Instead, the loan (plus interest) will be repaid when you die or sell your property to go into care.
Equity release through a lifetime mortgage could be a good option for you, but it’s important to consider the pros and cons.
Usually with lifetime mortgages, you can release between 20 and 60 per cent of the market value of the property. You can choose to release it as a lump sum, or in instalments.
The Times Money Mentor has an equity release calculator you can use to work out how much equity you might be able to release from your property.
Costs for equity release can vary. Aside from interest rates, you’ll also need to pay fees for:
This article is intended as a guide only. You should speak to a financial advisor or a mortgage broker for equity release advice, or if you’re unsure about anything.
Do you have any unanswered questions about equity release schemes? Let us know in the comments.
Photograph 1: Fizkes/stock.adobe.com
Catriona Smith is a content and marketing professional with 12 years’ experience across the financial services, higher education, and insurance sectors. She’s also a trained NCTJ Gold Standard journalist. As a Senior Copywriter at Simply Business, Catriona has in-depth knowledge of small business concerns and specialises in tax, marketing, and business operations. Catriona lives in the seaside city of Brighton where she’s also a freelance yoga teacher.
We create this content for general information purposes and it should not be taken as advice. Always take professional advice. Read our full disclaimer
6th Floor99 Gresham StreetLondonEC2V 7NG
Sol House29 St Katherine's StreetNorthamptonNN1 2QZ
© Copyright 2023 Simply Business. All Rights Reserved. Simply Business is a trading name of Xbridge Limited which is authorised and regulated by the Financial Conduct Authority (Financial Services Registration No: 313348). Xbridge Limited (No: 3967717) has its registered office at 6th Floor, 99 Gresham Street, London, EC2V 7NG.