After many years of struggling to find lenders willing to give them mortgages in later life, older borrowers are now being spoiled with options as high-street banks and building societies clamour to produce services and alter existing terms to satisfy an ageing population.
Last week, Nationwide, the UK’s building society, launched a new selection of retirement mortgages to assist older borrowers grow their retirement income and supply them with more flexible choices to make use of the equity in their property.
It joins 18 other lenders offering mortgages specifically designed for older borrowers and retirees.
And this week, Santander increased the maximum age and term on its range of buy-to-let mortgages, so it stated was to satisfy the demand from the older customers.
Which? explores the buy-to-let choices for older landlords, whether Santander’s changes put them in front of their rivals, and what your choices are if you wish to take out a home loan to book out a house.
Buy-to-let mortgage maximum ages
First reported by Mortgage Solutions, Santander has grown the utmost age at the end of the mortgage term from 75 to 85, and the maximum mortgage term on its buy-to-let vary from 25 years to 40 years.
This implies that someone retiring in the chronilogical age of 65 could potentially take out a buy-to-let mortgage with Santander for 20 years – as long as they meet the bank’s criteria for lending.
Previously, the oldest you could be to get a mortgage for the maximum term of Twenty five years was age 50; now, someone deciding to become a landlord at the chronilogical age of 45 could borrow for four decades prior to the loan must be repaid.
Santander, however, is playing catch up with all of those other buy-to-let mortgage market with regards to lending well into retirement.
Which? analysis of data from Moneyfacts finds those of 2,057 buy-to-let deals currently available on the market, almost sixty-six per cent (65%) possess a maximum age after the word of 85 and above. Some 30% from the deals have a maximum chronilogical age of 85, and 9% have a maximum age of 95. A fifth (20%) don't have any maximum age at all.
The chart below shows the range of deals available at increasing maximum ages.
Buy-to-let mortgage terms: how long can you borrow for?
This year has been centered on an upswing from the 40-year mortgage in the residential market, with more than 50% of deals now available offering an optimum 40-year term – up from 36% in 2022.
A four-decade term on a buy-to-let mortgage is less common – our analysis discovered that 25 percent of (27%) have deals permit you to borrow for 4 decades.
The majority of buy-to-let mortgages (49%) have maximum relation to 35 years, while 18% possess a maximum term of 25 years.
This means there are many options for older buy-to-let borrowers – 55% of buy-to-let deals are for sale to those aged 50 at the beginning of the borrowed funds. However, a fair chunk have low maximum ages and shorter maximum terms – we found 230 deals (16% from the market) are only open to those aged 35 or under at the start of the loan.
What’s going on in the buy-to-let market in 2022?
Last week, we says average interest rates on fixed-term buy-to-let mortgages fell to 3.26%, using the cheapest deals available for an initial rate close to 2%.
And there's a rising number of buy-to-let deals becoming available to property buyers with smaller deposits. Typically, you have to put 25% recorded on a buy-to-let property, but recommendations a number of lenders are providing deals to those with 20% as well as 15% deposits.
Landlords, however, are facing a slew of recent regulations to abide by. Forever of April, landlords have been instructed to enhance the energy efficiency from the properties or face a potential fine, while on 1 June, the government ban on charging tenants lettings fees will start working, with costs falling to home owners.
This story was updated on 18 April to reflect that Santander’s revised terms were first reported by Mortgage Solutions, not FTAdviser.