How to invest in rental property to boost your retirement income.
With the introduction of ‘Pension Freedom’ reforms for the over 55s, people will soon be able to withdraw their pension to invest elsewhere.
From April this year retirees will have more choice as to how they can to save, spend or invest their money by being able to withdrawn savings from their pension pot.
Rather than using pension savings to buy an annuity some may choose to invest in property. Of the 1 in 10 who say they plan to withdraw savings, 16% plan to invest in property to fund their retirement.
With relatively few houses being built in the UK there is a high demand for rental property, making owning a buy to let seem an attractive option.
However regardless of demand for rental property and relatively high yields, retirees are advised to carry out through research before becoming landlords.
When looking at potential rental yield it is import to consider tax, maintenance costs and mortgage repayments. Also remember property can come down in value as well as go up, and therefore owning a buy to let is not without risk.
Using your pension savings as a buy to let mortgage deposit.
For many withdrawing their pension may mean enough cash for a mortgage deposit but perhaps not enough for the outright purchase of a property.
With interest rates at historic lows mortgage rates for buy to let are competitive. Lenders are keen to attract investment landlords and so there are some attractive deals to be had.
Successful mortgage applicants will need to fit lending criteria which varies between lenders.
Aldermore for example has recently updated their criteria to accommodate a potential increase in applications from retirees. Their criteria is as follows:
- Maximum application age - 75 years.
- Maximum age at the end of the mortgage term – 85 years.
- No maximum BTL portfolio size out of the lender's 5 buy to let properties plus one residential property up to £2Million.
- No minimum income requirement for experienced landlords – however this is subject to a stress test.
- Pension Income accepted.
- Non owner occupiers are accepted if the applicant is an experienced landlord.
- Flexible approach to credit conduct/CCJs, Defaults, Missed payments/No credit score.
To review Aldermore's buy to let products in more detail call us at Deal Direct.
Some lenders have stricter criteria than others and lower age limits can come into play. With this in mind it pays to seek the help of an independent and whole of market broker to help you secure an offer.
For independent advice and a ‘whole of market’ buy to let mortgage search call us at Deal Direct on 0800 048 8828.
Please note:
- Deal Direct are mortgage advisers not financial advisers. We cannot offer advice as to the suitability of buy to let as an investment.
- Please note that not all buy to let mortgages are regulated by the FCA.
Call 0800 048 8828 for a competitive mortgage offer
