A buy-to-let equity release scheme can be a unique option for any landlord looking to access equity built up in a home they own but don’t use as their residence. If you own a home but you let-it-out under an Assured Shorthold Tenancy Agreement, a buy-to-let equity release scheme may be a good fit for you.


What is a buy-to-let scheme?

This particular scheme uses a buy-to-let property which is simply one that is not occupied by the owner. It must be let-out using an Assured Shorthold Tenancy Agreement. A buy-to-let scheme functions very similarly to other equity release schemes but uses a buy-to-let property as opposed to one that is the primary residence of the owner.

Buy-to-let lifetime mortgages are a fairly new concept and have been available since 2009. They have evolved since then and now, since 2013, there have been several changes to the way they work.  Interest rates have gone down and there have been changes to the overall features offered, with options for repayment being introduced. This just makes them an even more attractive option to those property owners who want the advantages of a lifetime mortgage but do not want to use it on the home in which they reside.


How to Qualify

Similar to other lifetime mortgage schemes, you must be at least 55 years old to qualify for a buy-to-let product. You must also not be older than 90. If you are borrowing with a partner, the age limit must be met by the youngest borrower.

There are also qualifications for the home as well. The property must have a minimum valuation of at least £70,000, but cannot exceed £6 million. It must be located in Scotland, Wales or England.

For a definitive answer on whether you qualify for a buy-to-let equity release mortgage, use our free smartER research tool.


How Much can I borrow?

The amount that you can borrow with a buy-to-let scheme will depend on a few different factors, the most impactful of which are your age, or the age of the youngest homeowner, and the value of your property. The amount truly differs for every borrower and it can be difficult to decide if this product is right for you without knowing how much you can borrow.

If you speak with one of our trusted equity release advisers, we can give you a better idea of how much you can expect to receive in equity release based on your individual circumstances. This can assist you in determining if this is the right product for your particular situation.


Key Features of a Buy-to-Let Scheme

There are several unique features that can come along with a buy-to-let scheme. Generally speaking, most providers of landlord equity release products use their lifetime mortgage schemes for the basis of developing their buy-to-let schemes. In other words, they function similarly and sometimes include some of the same features and advantages.

There are plenty of flexible features that are available with these buy-to-let schemes, including the option to make voluntary payments. Those voluntary repayments can be a huge benefit to  using this particular scheme.

By making payments against the balance of the loan, you can control the amount that will need to be repaid upon the eventual sale of the home. When your balance is kept under control, you end up lessening the impact of interest, given that interest only continues to increase as the overall balance increases. Repayments do not require affordability checks and you do not need to have your income verified in order to qualify for voluntary repayments. There really isn’t too much risk involved in making voluntary repayments, but there are plenty of benefits.

Another key feature of buy-to-let schemes is that they offer fixed early repayment charges for the first 8 years of the loan. Following that 8 years, there are not penalties applied for paying the loan off. This means that you have the option to pay off your loan before the home is sold. In the first 8 years, you will pay early repayment charges but they are fixed and won’t fluctuate. After that time, you won’t incur any charges.

If you are considering a buy-to-let scheme, there are several factors to be considered in order to determine if it is the right fit for you. We can help explain the benefits and risks as they apply to your particular circumstances.

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