Plans > Buy-To-Let Lifetime Mortgage

How could buy-to-let equity release work for you?

You could release cash from a buy-to-let property you own – or raise money to help fund a new buy-to-let investment

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What is buy-to-let equity release?

If you’re a landlord aged 55+ looking to release equity, a buy-to-let lifetime mortgage could be the answer. It’s a form of equity release lending that enables you to boost your finances without having to make any monthly repayments.

Or perhaps you are interested in making a buy-to-let investment but lack the funds or access to a regular mortgage you need. Here too, a lifetime mortgage may help by releasing some of the property wealth tied up in your own home.

When it comes to using equity release for buy-to-let properties, if you’re a homeowner aged 55+ there are three main ways equity release can be used:

  1. Release equity from a buy-to-let property you own 
  2. Unlock tax-free cash from your home to purchase a buy-to-let 
  3. Access money from a buy-to-let property you are purchasing in order to fund the purchase 

This guide to buy-to-let equity release looks at achieving these goals through a lifetime mortgage – the most popular form of equity release. Another, much less common option is a home reversion plan.

Find out how much you can release with a lifetime mortgage: check here or talk to one of our friendly consultants by calling 0808 178 3055 or request a call back.

Did you know?

No credit checks are required when you apply for equity release. So if you’re a landlord needing a cash boost but have a poor credit history, you could unlock some of your property wealth to take the pressure off your finances.

Understanding your options for buy-to-let equity release

Equity release has excellent potential as a flexible way for you to raise tax-free cash when other options are unavailable or unsuitable. Let’s take a look at your three main options for buy-to-let equity release.

1. Release equity from a buy-to-let property you own

If you’re already a landlord, you can release equity on a buy-to-let property to spend in any way you choose. From making home improvements to purchasing another buy-to-let or simply taking a well-deserved holiday, the choice is yours!

The money you unlock can be in the form of a tax-free cash lump sum or a regular income paid into your account. With an equity release lifetime mortgage, there are usually no monthly repayments to make. That’s because the loan plus interest is only repayable once the property is sold, usually when you pass away or move into long-term care.

There are specialist buy-to-let equity release plans available for landlords looking to unlock some of their property wealth. But these products aren’t always the best value and you may get a better deal with a standard plan. Your adviser will go through all your options with you during your free, initial appointment. Click here to book your appointment online.

2. Unlock tax-free cash from your home to purchase a buy-to-let

If you’d like to get into the buy-to-let industry to boost your monthly income, equity release could be a useful option. Many people dream of building a property portfolio but don’t have that initial lump sum to get started; this is where a lifetime mortgage can help.

Perhaps you still have a mortgage on your home, but wish to purchase a buy-to-let? The money you receive from an equity release plan must first be used to clear your existing mortgage, but you can use the remaining cash as a deposit on a buy-to-let property. You could then arrange a buy-to-let mortgage to complete the purchase of your new property.

If your buy-to-let property enjoys an increase in value over the coming years, you may be able to unlock a cash lump sum from it in the future to increase your portfolio with a second buy-to-let. 

3. Access money from a buy-to-let property you are purchasing in order to fund the purchase

If you want to purchase a buy-to-let without arranging a regular mortgage but don’t have all the money needed, you can apply for an equity release plan on that property to raise the remaining funds. Essentially, you tap into the value tied up in the bricks and mortar of a house you don’t own yet, in order to buy it.

Just remember that you can’t have a regular mortgage and an equity release plan on the same property. So equity release could help you to fund a cash purchase shortfall, as long as you have the remaining money in place.

Let’s look at an example…

Mr Wallace is a 65-year-old man who has recently retired. He has £150,000 from savings and cashing in his pension pots. After considering his options, he decides to purchase a buy-to-let property to generate a monthly income for the rest of his life.

He finds the perfect buy-to-let property for £220,000 which needs very little doing to it. He doesn’t want to arrange a buy-to-let mortgage to fund the shortfall as the monthly repayments would eat into his projected rental income of £750 per month, but he still needs to find the extra £70,000.

He discovers that he can arrange an equity release plan on the property whilst in the process of purchasing it, so he can access the £70,000 needed to complete the purchase. Once completed, Mr Wallace owns the property outright and starts to let it out to tenants straight away, earning £750 a month rental income.

When he passes away 25 years later, Mr Wallace’s family inherit the much-loved home that he lived in all his life. In addition, the rental property (which has increased in value after 25 years of ownership) is sold and the equity release loan plus interest is repaid, leaving an additional inheritance for his family to enjoy.

Find out more

Whichever of these options is of interest to you, call us today. We will arrange a no-obligation initial appointment with a specialist who can explain everything to you. Talk to one of our friendly consultants by calling 0808 178 3055 or if now isn’t ideal, request a call back and we’ll call when it’s convenient for you.

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Can I still do buy-to-let equity release with a mortgage?

Yes, you can arrange an equity release plan if you have a residential or buy-to-let mortgage. Equity release gives you the freedom to spend your money however you wish, once you have cleared any outstanding mortgage or other loans secured against the same property. Our carefully selected advisers are highly experienced and will be able to expertly guide you through the entire process.

Check your eligibility for buy-to-let equity release

Call us on 0808 178 3055 and we’ll arrange a free, no-obligation appointment and lifetime mortgage advice* from a specialist who will confirm whether you are eligible. If you’re unable to talk now, request a call back and we’ll call when it’s convenient to you.

Check my eligibility

How much can I borrow on a buy-to-let lifetime mortgage?

Several factors will determine how much you can borrow. They include the property’s value and how much equity you have in it. Your age will also be considered: you must be 55 or over to qualify.

With buy-to-let equity release schemes, the older you are, the more you can unlock from your property. Furthermore, if you’ve owned the property for a few years then it’s likely to have benefitted from an increase in value, so you may have even more equity available.

Maximum borrowing typically ranges from 25% to 60% of the property’s value, although with more specialised buy-to-let equity release plans the amount you can unlock may be less than this. Lenders typically have a minimum release level, starting from £10,000.

If you have certain health issues such as diabetes, high blood pressure or angina, or lifestyle factors such as smoking, you may be eligible for an enhanced lifetime mortgage that may enable you to borrow more money.

Providing you meet the eligibility criteria for a lifetime mortgage, Equity Release Wise could help you to release equity on a buy-to-let property. If you’re considering a buy-to-let equity release plan, you can check here for an initial estimate of how much you could release or talk to one of our friendly consultants by calling 0808 178 3055 or request a call back.

Read more: How much equity can I release?

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How does buy-to-let equity release work?

There are no monthly repayments to make with equity release for buy-to-lets, as the interest is added to the loan amount each month on a compound basis. However, you can opt for an interest-only lifetime mortgage that allows you to make voluntary regular full or partial repayments on your plan. When applying for a plan, your adviser will explain these options to you.

If you decide to use equity release for a buy-to-let deposit on a property that you’re in the process of purchasing, you must be offered a plan that enables you to make regular full or partial repayments of the loan capital. This is one of the Equity Release Council standards.

When your buy-to-let equity release plan comes to an end, any money left over after repaying the loan plus interest is returned to you or your beneficiaries. You may be able to ring-fence some of the value of your property to guarantee an inheritance for your family.

Whether you want to use equity release to buy a buy-to-let, or to look at releasing equity from a buy-to-let property, Equity Release Wise can get things started for you. We can arrange a free, no-obligation telephone appointment for you with one of our carefully selected equity release advisers. Talk to one of our friendly consultants by calling 0808 178 3055 or request a call back.

Read more: How does equity release work?

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Already have a lifetime mortgage?
You could switch for a better deal

Now could be a good time to switch to a different lifetime mortgage. You may be able to release more tax-free cash due to being older than when you took out your existing plan. An increase in your property’s value or being in poorer health could also qualify you for further cash. Interest rate changes may also save thousands over the lifetime of your plan.

Why not arrange a free review* to find out if switching works for you?

Learn more
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Which companies have lifetime mortgage products?

There are several lifetime mortgage providers to choose from and it may be inconvenient for you to talk to them all individually. To make life easier, Equity Release Wise can arrange a comparison from top providers to help you find the best lifetime mortgage.

Here are some of the leading providers that your search will compare. They are all authorised and regulated by the Financial Conduct Authority and are also members of the Equity Release Council.

aviva logo
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Apply for your no-obligation equity release quote

Find out if you qualify for equity release and how much you could borrow. Just click ‘Get started’ or call us on 0808 178 3055 and one of our team will be delighted to help arrange a free consultation and quote*.

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Answering your questions

Still unsure of a few things? We’ve got you covered with answers to some of our most frequently asked questions.

  • Are buy-to-let equity release plans available in Scotland, Wales, Northern Ireland and England?

      Yes, lifetime mortgages and other forms of equity release are available across every country in the UK. When you contact Equity Release Wise, we will connect you with our carefully selected advisers who can help you find the best plan for your circumstances.

  • How long does it take?

      On average equity release plans take around 8 – 12 weeks to complete. Some straightforward cases can complete more quickly, whilst more complicated cases can sometimes take longer. Your adviser will keep you updated at every stage of the process and will let you know when you can expect your tax-free money to be paid out.

  • What costs are involved with a lifetime mortgage?

      Just as with a normal residential mortgage, you should be aware of costs involved in setting up an equity release lifetime mortgage. Your adviser will make sure you understand these in full before you decide whether to take out a plan, but below is a summary.

      Your lender will typically charge valuation, arrangement and completion fees, with further fees payable to the solicitor who acts for you. Some of these fees can be paid from the money you borrow, so you may not have to worry about finding them from your existing savings.

      Our selected advisers naturally charge an advice fee – but remember that any initial advice or information you receive from them is completely free and without obligation. You only pay them a fee if you apply AND your case completes.

      Once a plan is taken out, there aren’t normally any fees. One exception is an early repayment charge that some lenders request if some or all of your lifetime mortgage is paid off before you pass away or move into long-term care. 

  • What are the potential risks of a buy-to-let equity release plan?

      A lifetime mortgage has worked for thousands of over 55s in need of tax-free cash. But it’s important to understand some potential risks before deciding if it’s right for you:

      • Lifetime mortgage rates are calculated daily and the interest is added to the amount you owe each month. The amount owed therefore increases and reduces any equity left in your home when the plan ends, unless you choose to make interest payments while the plan is running.
      • Taking equity out of your home will mean that the inheritance you leave to loved ones will reduce. Each time you take money from the plan, the level of possible inheritance will reduce.
      • If you give some of the money you release to family as a gift, they may be liable to pay inheritance tax in the future.
      • You may have to pay an early repayment charge if you choose to pay back some of the loan early.
      • Borrowing money and building up your savings through a lifetime mortgage may affect your entitlement to some means-tested state benefits. During your appointment with one of our selected equity release advisers, they will help you establish whether your benefits could be affected.

Other types of equity release

Other forms of equity release may be more suitable for you than a specialist buy-to-let lifetime mortgage. Read about these below, or talk about your options to one of our selected advisers to get the best solution for you:

Product lump sum icon

Lump sum lifetime mortgage

Access a tax-free cash lump sum if you’re a homeowner aged 55 or over. You retain full ownership and can stay at home until you pass away or move into long-term care.

Read more about lump sum lifetime mortgage plans
Product interest only icon

Interest-only lifetime mortgage

A more cost-effective method of equity release where you make voluntary interest payments to reduce or prevent compound interest building up.

Discover more about interest-only lifetime mortgage plans
Product enhanced icon

Enhanced lifetime mortgage

Certain health conditions or lifestyle factors could qualify you for higher cash releases or lower interest rates. A simple questionnaire is all that’s needed to check, with no medical examination required.

Read more about enhanced lifetime mortgage plans
Product drawdown icon

Drawdown lifetime mortgage

Instead of making a one-off cash withdrawal, you take an initial cash sum and additional funds as and when you need them. This helps to reduce the total interest you pay.

Learn more about drawdown lifetime mortgage plans
Product home reversion icon

Home reversion

A type of equity release where you sell all or part of your property at less than market value in return for a lump sum, a regular income, or both. You stay in your home rent-free.

Learn more about home reversion

Still have questions?

We hope this information has been useful, but we know that you may need to talk through your circumstances and any unanswered questions. Call us today or request a call back and a friendly equity release consultant will be happy to help.

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+ Client testimonials refer to the service provided by our selected equity release advisers. We have changed the clients’ names and certain identifying information to protect their privacy.

Please note that equity release will involve a home reversion or a lifetime mortgage, which is secured against your property and will reduce the value of your estate and impact funding long-term care. To fully understand the features and risks, ask for a personalised illustration. Equity release requires paying off any existing mortgage. Any money released, plus accrued interest would be repaid upon death, or moving into long term care.