There are several criteria commonly used by lenders when considering an application for a buy to let (BTL) mortgage. Although how these criteria are applied might vary from time to time and from one mortgage lender to another, the following are typical factors:
- you need to be interested in investing in residential property;
- you understand and accept the risks of such investments;
- your financial circumstances mean you can afford to take those risks;
- you have a sound credit record – and, preferably, own your own home; and
- until very recently, at least, you have to have been no older than 70 to 75 years of age when the mortgage came to its full term. So, for example, a 25-year buy to let mortgage taken out by someone as young as 45 would not end until they reached the age of 70.
Is there still a BTL mortgage age limit?
In recent years, mortgage lenders generally seem to have adopted a far more relaxed attitude towards those upper age limits.
The effect has been to encourage property investors to remain in the buy to let mortgage market until they are considerably older, well into their retirement, and in some cases up to 85 or even 95 years of age when the mortgage reaches full term.
As the tenancy deposits protection company My Deposits puts it, age is no longer a limit for buy to let borrowing.
The company points out that there are currently more than 2,000 buy to let mortgage deals on offer, with two-thirds of them prepared to entertain loans that do not reach full term until the individual reaches up to 85 years of age. More than that, 9% of buy to let mortgage deals have a maximum age limit of 90, while 5% have no upper limit at all.
An article by the Consumers’ Association’s Which? magazine confirmed the trend by identifying a range of mortgage products specifically designed for those who have already entered their retirement. The products might be used to help to augment incomes during those retirement years or as an aid in releasing equityThe difference between the value of the property and the amo... built up in the property owned by older people.
The article gave the example of an individual retiring at the age of 65, who could now consider taking on a 20-year buy to let mortgage that would run until they reached the age of 85. This option was simply unavailable only a few years ago when the age limits were around 70 to 75.
Why are age limits used anyway?
Any mortgage lender is interested in one thing – and that is knowing that their money is safe and that the borrower continues to make the necessary repayments as they fall due until the end of the mortgage term.
For that reason, lenders are accustomed to doing everything in their power to assess the affordability of a mortgage, the creditworthiness of the applicant, and the security of their employment and income.
Those considerations are every bit as critical when assessing applications for buy to let mortgages. Indeed, because few people under the age of 21 are likely to have built up a credit history of any standing or reliability, many buy to let mortgage lenders typically require applicants to be at least 21 years old. (This isn’t to say that you cannot get a BTL mortgage if you are under 21 – there are still some mortgage providers who will lend to you. A BTL mortgage broker can help you identify those lenders who lend to younger and older bororwers).
The principle on which a buy to let mortgage is founded is that the let property pays for itself. The loan is based on the fact that rental income will more than cover the monthly mortgage repayments – and the maximum amount of any loan is based on multiples of that predicted rental income.
But the lender must also build in a security net or back up against the possibility of the property remaining empty, with no tenants paying rent, for an extended length of time. In that event, of course, the borrower is going to be hard-pressed to make the monthly mortgage repayments.
If the borrower has already reached retirement age and relied on a pension as well as income from let property, went the logic, then the risk of a default on mortgage repayments was greater.
As we have seen – and as borne out by the current lending policies of many mortgage providers – age is no longer a barrier or obstacle to obtaining a buy to let mortgage.
FAQs- buy to let mortgage age limit
Can I get a mortgage after I retire?
Yes, it’s possible to get a mortgage after you retire from your job. There may be some complications while getting a buy to let mortgage on your retirement but you can always contact a mortgage broker to help you with your application. Getting a mortgage after retirement is not always difficult because of your retirement but it is more likely that your income may drop and you won’t able to meet your monthly payments.
How much deposit is required for a buy to let retirement mortgage?
There is not much difference in the deposit amount for buy to let mortgage at your retirement age. Some lenders might have some restrictions on maximum LTVThe maximum loan based on age factor but you can always contact a mortgage adviser to help you with the loan application.
What is the minimum rental income required for Buy-to-let mortgages?
Most buy-to-let mortgages require a minimum rental income of 125% of your monthly repayments.
You can read more about buy to let mortgages as a first-time buyer on our blog.
At what age can you have a buy-to-let mortgage?
It depends on what type of mortgage you want. If you want a fixed-rate mortgage, you can apply for one at any age. However, if you want a variable rate mortgage, you need to be aged 18 or over. The main criteria that mortgage lenders look for is your affordability of monthly payments.
However, even though you are above the age of 18, you should consider other factors such as your financial situation, your ability to manage money, your health etc. These things will affect how much you can borrow. You should also check whether you qualify for any government schemes such as Help to Buy scheme.
Can over 70’s get a buy-to-let mortgage?
Yes, they can! It all depends on the type of mortgage you choose. For example, if you choose a fixed-rate mortgage then you can apply at any age. But if you choose a variable-rate mortgage, you need to apply before you turn 75 years old.
The main reason why people don’t get a buy-to-let mortgage when they reach their retirement age is due to the fact that they have been relying heavily on their pensions and savings. This means that they could face difficulties paying off their mortgage or completing monthly payments.
If this is the case for you, you should start saving now so that you can make sure that you can afford to pay off your mortgage once you retire.
What is the maximum age for a buy to let mortgage?
As mentioned earlier, most buy-to-let loans are available up until the age of 75. However, some lenders may have different rules regarding the maximum age for a mortgage. If you are looking for a buy-to-lett mortgage and you are planning to retire soon, you should consider applying for a mortgage early. This way, you can ensure that you can still enjoy your retirement without worrying about repaying your mortgage.