It really is changing from a fairly predictable sector into a dynamic one infused with innovation. And it’s great to see.
The latest example of this innovation is a new equity release product aimed at landlords, which uses up to five buy-to-let properties (located in England and Wales) as collateral.
Crucially, this product recognises that landlords are likely to have an inconsistent spread of equity across their portfolio. This is quite something given that the vast majority of equity release lenders will only release on the main property.
This new product is a fantastic way for your clients to generate funds for further development and renovations, or even receive an income from a portfolio without having to sell up.
Essentially, it enables landlords to raise additional capital (between £25k and £500k per property) without having to worry about the monthly payments — and without having to worry about being rejected on the high street.
Indeed, while buy-to-let loans may be back, the criteria are still fairly tough — and landlords who may want to add to their portfolios in such an attractive rental environment are still getting turned down in their droves. This product gets around that. It gets better, too, as it can also be used on second homes.
All in all, it’s certainly something brokers should have on their radars when speaking to their landlord clients. It offers instant capital or an instant income, whatever they want and has the added benefit of being very tax-efficient, helping to mitigate capital gains and IHT.
As for the small print, the minimum age for this product is 55, at which the maximum LTV is 16%. The maximum LTV of 45% is available to applicants aged 85 or over.
A lifetime rate of 6.39% applies to clients between the age of 55 and 80, and 6.55% to applicants aged 81 and above. Further advances can be considered after three years and early repayment charges are amongst the most flexible in the equity release industry.