Buy-to-Let growth
The last year or so has again been a good one for the buy-to-let sector, with most existing landlords expecting the trend to continue in 2013.
Not only have the problems faced by first-time buyers helped to fuel demand, but there also continues to be a lack of available housing. For example, the Joseph Rowntree Foundation set out that 750,000 new homes are required by 2015 to meet demand; a figure that they feel will be missed by a long way. (Source: Sept 2012 press release) More Landlords So it's not surprising that 41% of existing landlords believe tenant demand will rise in 2013, with just 6% feeling that it will go the other way*, which is good news for the new landlords that are likely to be entering this sector. (Source: *paragon, Q4 2012 survey) How we can help If you need to raise funds for your buy-to-let purchase(s), then do talk to us. Additionally, we can assist with your insurance requirements too. This area can be quite complicated as some policies may be fairly selective about the type of tenant it covers, or have different terms when the property is vacant. Furthermore, there are more specialised policies such as “rent guarantee insurance�, which could be combined with legal expenses cover, should there be a dispute with a tenant. Do get in touch to find out more. There is no guarantee that it will be possible to arrange continuous letting of the property, nor that the rental income will be sufficient to meet the costs of the mortgage.
The value of your Buy-to-Let property and income from it can go down as well as up. You may also require advice on the legal and tax issues. The Financial Conduct Authority does not regulate legal and taxation advice, and most Buy-to-Let mortgages. As with all insurance policies, terms, conditions and exclusions will apply.
Equity release: FAQ What is equity release? This is the name given to the release of the wealth that is tied up in a property without having to sell the property or move to another home. There is an option to borrow against the value of the property which can then be spent on whatever you would like.
What are the types of equity release? Lifetime Mortgage: this plan allows individuals to extract their funds in a single lump sum or in smaller amounts over time until the agreed maximum limit is reached. Home Reversion Plan: again, this allows an individual to access all or a part of the value of property while still having the right to remain in it without paying rent.
What is, if applicable, the minimum value for properties on which equity release is available? Equity release providers will typically not accept any properties that are valued at under ÂŁ75,000.
How much will I be able to borrow? A professional valuation will be undertaken by a surveyor following the instruction of a provider which would then give the amount that could be released. The amount can also be affected dependent on age.
How do I set up an equity release plan? Prior to moving forward, seek professional advice and do research which will help when you speak to an advisor.
How old do I need to be? In order to qualify for a Lifetime Mortgage, individuals will need to be 55+, the same age that qualifies for when taking out a plan with a partner. For a Home Reversion Plan, the asked minimum is 65.
What happens if I live with someone else?
An individual is able to take out a joint equity release plan is they are married, in a civil partnership or living with another as a partner and are both eligible by age.
For further information about an equity release plan, please click here, alternatively you can visit Equity Release advice site for other services.
Equity Release Mortgage Equity Release Mortgage - Younger borrowers turn to an equity release mortgage post-MMR
Following the Mortgage Market Review (MMR) and upcoming pension reforms, younger borrowers are turning to an equity release mortgage, according to the Spring 2015 edition of the Equity Release Market Report. The percentage of new equity release mortgage customers aged 55-64 dropped from 24% in 2011 to 21% in 2013, pushing up the average customer’s age towards 71. This trend continued in the first half of 2014 when just 17% of new customers fell into the 55-64 age category.
However, in the wake of the March 2014 Budget and MMR implementation in April, this age group made up 20% of new equity release mortgage customers during the second half of the year. So the number of new equity release mortgage customers in the 55-64 age bracket was 32% higher in H2 then it was at the beginning of the year, which was also the busiest half year since 2008 for total new plans agreed. The data suggests that the residential mortgage and pensions market changes are having an effect on the profile of equity release mortgage customers. Reports show that people are finding it more and more difficult to obtain residential mortgage finance later in life under the MMR rules – particularly if the preferred term would stretch beyond retirement age. Also, there are many borrowers with interest-only mortgages who are approaching their final repayment date and have limited or no resources for a repayment vehicle. Using equity release to pay off their existing mortgage has become a common solution to this. An immediate need for extra funds may have been the reason why some younger borrowers turned to an equity release mortgage in the second half of last year, rather than accessing their pension savings ahead of the new pension flexibilities which will take effect on 6th April 2015. Drawdown lifetime mortgages continue to be the most popular product type among equity release mortgage customers with two-thirds of new customers choosing a drawdown product last year. Meanwhile 34% opted for lump sums and less than one per cent decided on a home reversion plan. Drawdown customers typically have more valuable homes but they withdrew less than a sixth of their total housing wealth as an initial payment during 2014. This amount is still 85% larger than the average single defined contribution pension pot of £25,000. Lump sum customers released an average of £69,118, which is 176% larger the average DC pension pot. The comparison highlights the significant contribution that housing wealth can make as an additional source of funding in later life, to complement or compensate for people’s pension pots. Post courtesy of Financial Reporter.