Readers of my columns will know my opinion on unnecessarily stringent age restrictions on buy to let mortgages.
For those of you who haven’t read this before, however - essentially, I fail to understand why it matters whether a landlord will be past the age of retirement while the loan is in play since the mortgage is repaid through rental income not standard employment income. In short, I’ve always believed a landlord’s income or earning ability to be neither here nor there when it comes to buy to let. However, in recent years the market has changed significantly – most notably when it comes to rental calculations – and all of a sudden a landlord’s income has become more important. Indeed, for some it has become essential.
Lenders now require landlords to be able to achieve rents that are considerably higher in relation to their mortgage repayments than ever before. Failure to be able to do so means the mortgage may be rejected. However, a number of innovative lenders are finding ways of meeting this new stricter criteria imposed on the market whilst still helping landlords. Indeed, Precise is one such lender. It will now offer the option for customers to use their excess earned income to support their buy to let application and achieve the loans they need.
This development will, I’m sure, be hugely welcomed by amateur landlords with good incomes, allowing them to maximise loans without having to use a five year fixed pay rate.
Many landlords easily have the surplus income needed to guarantee any shortfalls and it is just good common sense for a lender to allow this to be utilised. This sort of innovation is what will take the buy to let sector through the challenges it faces and ensure it remains a prosperous and successful sector.