Releasing Equity for Buy-to-Let
Looking for advice on buy-to-let equity release? Check out our expert guide to getting the best rate.
For property owners over the age of 55 equity release makes it possible to access capital they’ve built up while paying their existing mortgage as a tax-free lump sum. Usually this approach is used on a residential property but buy to let landlords can also unlock capital via equity release on their investment property portfolio.
If you’d like to talk to someone about equity release mortgages please call 01743 382018 or read on to learn everything you need to know.
Speak to an expert about how to release equity for buy-to-let.
Everyone’s circumstances are different, our expert mortgage broker team have built long term relationships with specialist lenders.
Because we know first-hand how scary it is to enter the mortgage market, we work hard to give you the best rates and highest chance of approval.
If you have any questions about your next steps then contact us or call 01743 382018/span> and our expert mortgage brokers will help answer any of your questions.
What we’ll cover
Speak to an expert about releasing equity to invest in buy to let properties.
We understand how scary releasing equity from your lifetime mortgage can be. As an independent mortgage adviser and financial planner, we’re able to provide the highest level of guidance on what’s involved in the process. To speak with us please call 01743 382018 or fill in the contact form below.
Can you take an equity release mortgage on buy-to-let property?
Yes, but you might find your options very limited. The vast majority of equity release providers will turn you away outright if the property you’re releasing capital from is a buy to let, but that isn’t to say it’s impossible. A very small minority of providers cater for investment property owners using a similar, yet often more stringent, criteria to the retirement lending companies who work exclusively with residential homeowners.
If you’re a professional landlord with a portfolio of properties, it might even be possible to release equity across all of them and take out a scheme based on your combined equity.
If you’re considering taking equity release on a buy to let, it’s a good idea to speak to a broker for professional advice first, as releasing equity from a property isn’t something you should do lightly. You’ll need to consider every alternative and, if equity release is the right option, make sure you end up with the best deal available on the market.
What schemes are available?
The only equity release schemes for buy-to-let property owners are the rental property equivalent of lifetime mortgages. The providers who offer them don’t call them lifetime mortgages as they don’t fit the Financial Conduct Authority’s (FCA) definition for these products, but they are essentially the same thing, and different in name only.
How buy-to-let equity release mortgages work.
If you take out one of these products, your equity release provider will place a charge on your investment property, and in return, you can release some of the capital you’ve built up either in the form of a lump sum or monthly instalments.
There aren’t any mandatory monthly payments to make during the loan term since the interest can be rolled up and added to the debt at the end of the agreement, which won’t come until the last surviving borrower passes away or enters long-term care. There are, however, products that give you the option to make capital repayments during the term.
If your property declines in value and leaves the provider with a debt they’ll struggle to recoup, there is no danger of your beneficiaries being hit with the bill for this. This is thanks to measures from the Equity Release Council called the Negative Equity Guarantee.
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I cannot recommend them enough! I contacted LG Embrey in April 2017 following a recommendation to advise me on getting a mortgage. I received a fantastic service from the start to finish of the process. They were extremely helpful, guided me and kept me updated throughout. They went above and beyond in my opinion and was extremely prompt. LG Embrey is very down to earth, approachable and professional, which put me at ease as a first time buyer, and made the process stress free. When I come to remortgage, or require any further financial advice I would not consider using anyone else. They are excellent at their job, and genuinely cares for his clients and providing them a quality service.
After recently trying to sort through the myriad of offerings for Equity Release Lifetime Mortgages currently on the market I went to LG Embrey Financial, and was very grateful for their expertise and help in coming to a decision. The whole process was made so much easier by their quick, sensible and professional approach.
Speak to an expert about releasing equity to invest in buy to let properties.
We understand how scary releasing equity from your lifetime mortgage can be. As an independent mortgage adviser and financial planner, we’re able to provide the highest level of guidance on what’s involved in the process. To speak with us please call 01743 382018 or fill in the contact form below.
How much equity can you release?
The maximum amount of equity you can potentially release from a buy-to-let property through a lifetime mortgage equivalent is up to 44% of its value. The exact amount of equity you can release from your BTL will depend on the following factors.
- How much your property is worth
- How much equity you’ve built up
- Your age
Obviously you’d be able to release more capital from a high value property with plenty of equity than you would from a low value one with minimal equity. But age is an important part of the provider’s calculation. Older borrowers can release more equity than those who’re likely to live longer, and the highest loan-to-value ratio is usually reserved for them.
Rules and eligibility criteria
You will need to be aged over 55 or over to qualify for an equity release scheme of any kind, but if you meet the rest of the provider’s requirements, the capital you release can be used for pretty much any legal purpose, from home improvements to funding a holiday.
Here is a quick summary of the requirements for buy-to-let equity release:
- Applicants must be aged 55 or over
- Must hold enough equity in your buy to let
- Must have tenants in their BTL
- Have an assured tenancy agreement in place
The exact amount of equity you need to hold may vary depending on other factors, such as your age and the overall strength of your equity release application.
Speak to an expert about remortgaging to release equity.
We understand how scary releasing equity from your residential mortgage can be. As an independent mortgage advisers we’re able to provide the highest level of guidance on what’s involved in the process. To speak with us please call 01743 382018 or fill in the contact form below.
What alternatives are available?
Lifetime mortgage equivalents aren’t the only option if you want to release equity from a buy-to-let property. At this point, we should clarify that equity release and releasing equity are two different things. Equity release is a specific product type aimed at people in later life, while releasing equity can simply refer to unlocking some of the capital in your property.
Obviously there is crossover between the two and some of the other ways to release equity are viable equity release alternatives. The most popular ones include:
- Remortgaging: Refinancing is another way that you could raise funds through a buy-to-let property you own. Most mortgage lenders will let you borrow up to 75% of the property’s value if you hold enough equity. See our guide to buy-to-let remortgages to find out how this works and whether it’s the right option for you.
- Secured loans: If you don’t want to remortgage or take equity release (or you’re not eligible for either) a secured loan could be an option to consider. This is basically a secondary mortgage secured against the equity in your property. Lenders are known to be generous with the amount you can borrow, as long as they’re convinced you can make the repayments in addition to any primary mortgages you have.
- Further advance: Getting a further advance on your existing buy-to-let mortgage could be a third alternative to consider. This would involve undergoing affordability and credit checks again with your current lender so they can make sure you’re eligible, but your existing relationship with them might help you qualify.
- Equity release on your home: If you own a buy-to-let property and your own home, it’s worth thinking about the pros and cons of taking equity release on one over the other. Putting a lifetime mortgage on your BTL means that you wouldn’t have to put up your main residence as collateral, but taking enquiry release on your home means you can potentially borrow more and have a wider choice of products.
Whether you should take equity release on your buy-to-let property or choose one of the other options listed here is a question to put to a mortgage broker. We work with experts who specialise in both equity release and buy to let, and they will be able to go through all of the available options with you and help you make the right decision.
Speak to an expert about equity release for buy-to-let property owners
If you’re considering taking equity release on a buy-to-let property, it’s always a good idea to seek professional advice before you get started. The right broker will have the knowledge and expertise to help you make the right decision, whether that’s a lifetime mortgage equivalent or one of the alternatives to buy-to-let equity release.
We offer a free broker-matching service that will help you find the perfect advisor for you. It will take your circumstances into account and pair you with an expert who specialises in buy to let and equity release. We will only introduce you to a broker we’ve vetted ourselves, so we can vouch for their track record when it comes to helping customers just like you.
Please call 01743 382018 or make an online enquiry to make a no-obligation chat between you and our expert equity release advisors.
FCA disclaimer
The content contained in this article is accurate to our knowledge and up to date at the time of writing. For the latest guidance please speak of the advisors. This site is not tailored to each reader so the information does not constitute as financial advice. All our advisors are fully qualified and authorised and regulated by the Financial Conduct Authority under pi financial ltd,. Registered address: Morfe House, Belle Vue Road, Shrewsbury, SY3 7LU, Company number 3556277, FCA 186419.
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