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Posts Tagged ‘Landlord Equity Release’

Newlife Rekindle Their Unique Buy-to-Let Equity Release Plan

Thursday, April 25th, 2013

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Originally released in 2006, the newlife Landlord equity release scheme was withdrawn a number of years ago, coinciding with a general drop in equity release applications & funding.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.

 

Qualifying criteria

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.

 

New Equity Release Scheme Launches To Help Landlords in the Buy to Let Mortgage Market

Friday, February 11th, 2011

The resurgence of the equity release market gathers momentum in 2011 with the news that New Life Mortgages are set to re-introduce their landlord & second home equity release schemes on 11th February 2011.

Following the additions of more2life & New Life Mortgages to the equity release market late in 2010, the latest launch from the innovative lifetime mortgage lender signals a degree of diversity to their portfolio.

New Life Mortgages temporarily withdrew from equity release market in 2009. They obviously haven’t been sat idle, but instead waited for their opportunity to re-enter at the right time & with the right products.

Following on from my previous article on New Life Mortgages rejoining the equity release market in November 2010, here we discuss the features & benefits to landlords of this unique equity release plan.

 

How does the scheme work?

The New Life Mortgages Landlord Loan provides a tax free cash lump sum based on a percentage of the value of the residential investment property & the age of the applicant. Plans start at age 55 & any landlord with a portfolio of upto 5 rental properties can potentially release some of the equity tied up within them.

This buy to let equity release has no set repayment date & no monthly repayments to make. The loan is eventually repayable on the sale of the property when the last surviving borrower has died or gone into care.

 

How do I qualify?

  • Minimum age of 55 (for joint applicants minimum age 55 of the youngest)
  • Investment property must be in England & Wales
  • Landlord loan minimum property valuation  of £100,000 & a maximum of £1million
  • Minimum release is £25,000 & maximum is £500,000
  • The property should be standard construction with flats over 5 storeys excluded
  • If leasehold property, then 80 years must be remaining on the lease
  • Any existing mortgage must be repaid on commencement of the Landlord scheme

 

How Much Can I Borrow?

This is determined by the age of the youngest applicant & the value of the investment properties:-

Age 55 –  16%
Age 60 –  21%
Age 65 –  26%
Age 70 –  31%
Age 75 –  36%
Age 80 –  41%
Age 85+ – 45%

 

Therefore, as an example a 65 year old landlord with a single investment property of £200,000 could potentially release a capital lump sum of £52,000.

 

How does it compare to a normal equity release scheme?

The scheme in principle works exactly the same. You borrow the money, the interest accrues on a monthly basis & it is repaid when the property is finally sold.

The differences lie in the rental side; an assured shorthold tenancy agreement must be in place to qualify & cannot be let to family members.

Also, there are maximum borrowing criteria, similar to a buy to let mortgage. This states that the monthly interest charged cannot be more than the rental income received.

 

What are the costs involved?

  • Valuation fee dependent upon the value of the investment property
  • Application fee which can be added to the loan
  • Solicitors legal fees
  • Lifetime fixed monthly interest rates of 6.39% (age 55-80) & 6.55% (age 81+)
  • Early repayment charges only 5% for the first 5 years. No charges thereafter.
  • Any advice fee charged by your equity release specialist

 

Practical uses of the New Life Landlord buy to let mortgage?

The equity release funds can be utilised in many ways.

With market opportunities growing in the rental market as house prices fall & yields increase, bargains are there to be had.  Should any residential landlord wish to expand their portfolio & have concerns over the expense of buy to let mortgages they can consider schemes such as this.

Should a potential landlord spot a new investment opportunity, but has limited capital for deposit, then landlord equity release schemes could assist. The borrower could review all properties under his portfolio & by using an equity release calculator; assess how much could be released individually to meet the shortfall required.

Additionally, with the age group eligible for this buy to let mortgage there could be tax implications. Therefore, should some of these assets need to be disposed of, rather than selling the property & incurring capital gains tax, then equity release can be undertaken instead.

Finally & the most common purpose for this could be for debt consolidation purposes. Should financial difficulties arise on a buy to let mortgage or other personal finances, then subject to the amount that can be released, these debts can be repaid.

 

Perhaps one has just had enough repaying a buy to let mortgage & would rather receive the gross rental income to support their retirement?

The uses of the New Life Landlord scheme can be many; so to discuss how the features of this unique buy to let lifetime mortgage can benefit you contact the Equity Release Supermarket team on 0800 678 5159 or email mark@equityreleasesupermarket.co.uk

 

 
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