Equity release is a popular way of raising money on your property without having to sell the house. There are different types of equity release mortgages, but essentially it is a loan taken against the value of the home, and is repaid when the house is sold, after the owner has died or moved into care. If you have more than one property, it may be possible to release equity on the second home as well. Buy to let equity release is now available from certain equity release lenders.
Some lenders offer equity release loans on multiple holiday homes as well as buy to let homes. Loans are usually offered only if the landlord or the landlords’ family does not rent or live in the property. Buy to let equity release rates are different from home equity release interest rates so it’s worth using an equity release calculator specially designed for buy to let equity release.
Of course, most lenders do not lend if there is an existing large mortgage on the property. The mortgage, if any, must be smaller than the equity that can be released on the property. The amount of equity that can be released on a holiday home depends on several factors, including the age of the applicant. Buy to let equity release is generally only offered if the youngest applicant is over 55 years of age. Landlords with up to 5 buy to let properties can potentially release a proportion of the equity on each property.
The amount of the loan generally varies with age. The more the age of the applicant or the age of the youngest applicant in case of joint applications, the more the proportion of equity that can be borrowed. Also, loans are generally offered in lump sums as opposed to monthly borrowing. Buy to let equity release schemes are becoming increasingly popular, especially among landlords with an extensive property portfolio, as it opens up many possibilities for them in terms of financial planning and further investment.
As with any equity release mortgages, buy to let equity release mortgages involve some setting up costs. These include professional valuation fees which are usually in proportion to the value of the property, application fees, and solicitors’ fees. In addition, if you go to an independent financial adviser, setting up costs also include any fees charged by the adviser.
Individual buy to let equity release schemes may also have additional costs such as early repayment charges. These vary with each policy and as with any financial loan, it is important to find out about all the associated costs before entering into any legally binding contract.