With a timely return to a buoyant buy-to-let mortgage market, newlife (formerly New Life Mortgages) have re-launched their unique ‘Landlord Loan’.
Originally released in 2006, the newlife Landlord equity release scheme was withdrawn a number of years ago, coinciding with a general drop in equity release applications & funding.
The newlife landlord lifetime mortgage is another welcome addition to the developing equity release sector, which is seeing a resurgence in lending with similar innovative products & lowest ever interest rates.
What is the landlord loan?
Effectively, the newlife Landlord Loan is a buy-to-let equity release mortgage. It is designed specifically for the over 55 age group, who are using rental property for investment purposes in order to help boost their retirement income.
Being able to release equity from their portfolios, the landlord loan could help finance more buy-to-let projects and also help with capital gains tax mitigation.
How does the landlord equity release scheme work?
Based on the principle of the roll-up lifetime mortgage, the buy-to-let equity release scheme helps landlords with rental properties withdraw equity tied up in their portfolios.
Normally strict rules apply to equity release schemes as the property concerned must be the main residence. However, newlife have bucked this trend & designed this landlord equity release plan around the rental market and have coincided this release with a 2nd home or holiday home equity release plan.
In essence, any UK landlord over the age of 55 with a qualifying buy-to-let property can release a percentage of the property value with NO monthly repayments necessary. There must be no mortgage present on the property; otherwise the existing mortgage will need to be repaid from the proceeds of the landlord loan.
The equity release landlord loan attracts a rate of interest at 6.55% (7.1% APR) and is fixed for the lifetime of the mortgage. The interest rolls-up on a monthly basis and is eventually repaid upon death or the last person.
The landlord scheme carries all the principles laid down by the Equity Release Council including a no negative equity guarantee, thus protecting the beneficiaries from ever owing more than the property value itself.
Applicants must be 55 attained and have a buy-to-let property valuation of at least £150,000. The property must be in England & Wales and let on an Assured Shorthold Tenancy basis. A portfolio of upto 5 properties can be included, with a minimum loan of £25,000 and the maximum being £250,000.
How much can I borrow on the landlord loan?
The size of the release is determined by age & property value, therefore income verification is not required. Nevertheless, newlife will require the rental income to at least cover the interest charged in the first month of the term.
An example release could be illustrated by considering a male aged 65, with a rental property value of £200,000. The newlife landlord loan would release upto 23% of the property value – a maximum release of £46,000.
The range of LTV’s stretches from 13% at age 55, upto a maximum 42% once age 85 is attained.
Benefits for buy-to-let property owners
- the release of equity is free of tax & can be spent in whatever way you choose
- landlord equity release helps cash flow in retirement as you continue to receive rental income, but without having to make any monthly repayments
- Open-ended mortgage with no fixed repayment date
- Opportunity to restructure your property portfolio to provide additional retirement income
- The lump sum could be used to settle any outstanding interest only mortgages still running due to failed endowment policies
- Can be utilised as part of a divorce settlement where the matrimonial home is to be retained by one party
- Help the funding of long term care by converting the main residence into a buy-to-let which can then provide a tax free lump sum and additional income to pay care costs
- The opportunity presents itself now to delay the sale of a BTL property, when property prices may still have growth potential in the future
- The tax free lump sum could be used to purchase an annuity or enhanced annuity which has its own tax advantages and provides additional income in retirement.
- A fixed interest rate of 6.55% which means the future balance of the buy-to-let lifetime mortgage scheme will be known from the outset
- Tax advantages arise whereby the property sale can now be postponed if a landlord loan is taken instead. This can then defer, or even avoid potential capital gains tax in the future
- The landlord equity release plan is portable & can therefore be transferred to a new qualifying property
- Further advances can be considered after 3 years, with a minimum top-up of £10,000.
If you are a 55+ landlord and looking to release equity from you buy-to-let portfolio, then call Equity Release Supermarket today on 0800 678 5159.
*To obtain a quote you can visit our newlife landlord page by clicking here.