When she came to us, our client – an eighty-five-year-old retiree – owned three unencumbered properties, of which one was her permanent residence and the other two were buy-to-let (BTL) properties being let out. She had no pension, nor any other investments, which meant that the rent being generated from these buy-to-let properties constituted the entirety of her monthly income. She felt that by releasing equity from one of her buy-to-let properties and putting this capital down as a deposit for a third buy-to-let property, she could increase her monthly income substantially.
The problem our client faced, however, was that the lenders she had approached prior to coming to Private Finance were unwilling to consider her mortgage application because she was older than their maximum age at application. In order to secure our client the mortgage she required, it was therefore necessary that we locate the lenders who were willing to consider our client’s application despite her age. Additionally, the entire purpose of this initiative was to maximise our client’s monthly income; minimising the size of her monthly mortgage payments was therefore imperative to achieving this goal.
With access to the whole of market and strong working relationships with a huge range of lenders, the brokers at Private Finance are often able to generate solutions to problems that did not previously seem solvable. Although on this occasion many lenders were unwilling to entertain our client’s application due to her age, we were able to find many others that were perfectly happy to offer a mortgage to an older borrower provided other criteria were met. Having located such lenders, we began our survey of the market, looking for lenders that were willing to offer the most competitive rates to borrowers of our client’s description.
The lender that we eventually selected was willing to offer buy-to-let mortgages to borrowers of any age provided the borrower was what they defined as an ‘experienced landlord,’ which they defined as an individual who has owned BTL properties for at least one year prior to their mortgage application. Our client was able to satisfy this criterion, which meant that she was able to secure the mortgage she desired.
We were able to secure our client a five-year fixed rate, interest-only mortgage for 65% of her property value (£156,000) at 2.19%. The fact that this product was fixed for five years meant that our client’s mortgage payments would remain constant for the duration of this term, limiting the variability of her income; the fact that this mortgage was interest only meant that our client’s monthly mortgage payments were minimised as far as was possible (£288.34). Taken away from the monthly rent generated by this property (£825), this left our client with £536.66 of net income from this property each month, plus a lump sum of £156,000 with which she could facilitate the purchase of a third buy-to-let property.