Can someone over the age of 75 go on a mortgage?
We are often asked if we can arrange mortgages for elderly or retired people of 70, 75, 80 or even 90 years of age.
This will depend on the circumstances – whether the mortgage is for a Buy to Let or Residential property, if it is a joint application and if the income of the older applicant is being used in the affordability assessment.
For BTL mortgages, most lenders do have a maximum age up to 80 but there are a few who have no maximum age.
For Residential mortgages, where the income of the elderly applicant is being used in the affordability assessment, most lenders will not go beyond the age of 75-80.
If it is a joint application with a younger applicant who can afford the mortgage without the elderly applicant’s income being used in the affordability calculation, then there are lenders who will ignore the age of the elder applicant entirely.
There are of course other mortgage products available to more senior applicants, such as Lifetime mortgages and Home Reversion Plans which work in very different ways to a normal mortgage and require specialist advice.
It is important to remember that all applicants of a joint mortgage would be responsible for the payments regardless as to whether their income was used in assessing the case. Therefore, as part of the advice process we would consider arranging protection in case of death, illness or injury to either party.
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It’s been a long time since I have had anything significant to write about in terms of new products, but this morning Kensington Mortgages have announced what must be one of the most significant signs to date that mortgage lending is returning to some sense of normality.
Their new buy to let product range is available up to 85% loan to value even for first time landlords, and although arrangement fee’s on the 85% product are 2.5% it is still a major step forward for buy to let landlords particularly as it is available on up to 3 properties with an interest rate of 5.99% fixed for two years and with a portfolio maximum of £1 Million or 3 properties on the product.
Rental coverage requirements are also lower than the competition with a rental yield requirement of 120% coverage at the pay rate required and this should help to ensure that the products are viable . The range also now allows first time landlords into the market at 80% and at this loan to value there is a flat fee product option as well as a 2.5% fee which will work well for those borrowers with higher property values.
The products are also available for both purchase and remortgage however they are only available for properties in England and Wales, have a minimum income requirement of £25,000 or £30,000 above 75% loan to value.
For more information on any of these products please call one of our mortgage advisors on 0845 4594490.
Question : I am looking to buy a flat above a shop or other commercial premises and have been told this can be difficult, what do I need to be aware of?
Answer: Lenders always have to be aware of risks that may affect the value of a property and saleability should the loan go into default. A flat above a shop or commercial premises has several risks which a lender will consider when deciding whether to lend.
These will include the nature of the business which the flat is above; if it is something which would cause little disturbance to the owners of the flat such as a florists or estate agents it is less of a risk. However if it were a fish and chip shop for example where late opening hours and food smells may affect the ability of the lender to re-sell the property then it is likely that it may be difficult to arrange a mortgage.
Consideration will also be given to the area in which the flat is located. A flat over commercial premises in an area like Chelsea or Knightsbridge would still command a significant value and appetite for lending. However the same property in an unfashionable part of a city like Manchester or Liverpool may be much more difficult to arrange a mortgage on.
Another important factor would be the access to the property, if it has a connected access to the commercial premises then insurance would be very difficult to arrange separately and this would also restrict lending.
You should be aware as a potential purchaser of such a property of these same risks as properties which are difficult to mortgage may in turn be difficult to sell. For further information and advice on flats over commercial property call one of our mortgage advisors on 08454594490 for independent mortgage advice.
Mortgage Interest rates continue to creep slowly downwards towards the current bank base rate of 0.5% and it’s clear to mortgage brokers that while the range of products on offer in the market currently is still a major factor preventing true growth in the property sector particularly in buy to let, It is still very encouraging to see the mortgage works increase their maximum loan to value for buy to let mortgages to 80%.
The new products are quite competitively priced and so this reduction of minimum deposit size is one of the few examples of lenders returning to a competitive spirit since HSBC announced their 2% tracker rates more than a year ago.
Fixed rates are available from 4.69% with a 2.5% arrangement fee, 5.69% with a 1.5% fee and 5.79% with a £1795 arrangement fee and a 5% early repayment charge during the initial term of the product. Standard legal and valuation charges would apply.
A lending limit of £350,000 at this LTV will reduce the popularity of the product in the south east but should help to ensure that TMW are not saturated with new business, and it is likely that this too will be increased in the not too distant future.
For further information about these products please speak to one of our mortgage advisors on 0845454490.
Capital gains tax is levied on gains made on certain non exempt sales of assets at a current rate of 18%. Your main residence is effectively exempt from Capital Gains Tax through tax relief, however any second home or investment property will become liable for Capital Gains Tax from the date at which it is no longer your main home.
So if you bought a property as a second home or buy to let then it is liable from the date of purchase, whereas if you bought a property as your main home and subsequently moved to a new property letting the old one, then the old property becomes liable to Capital Gains Tax from the date of transfer however there is a 36 Month leeway given so effectively you owe Capital Gains tax on the property from 36 Months after its transfer to a buy to let.
Losses and expenses can be set off against any gain, so keep a record of all your costs as a landlord including maintenance bills etc but not including your mortgage costs (mortgage interest is offset against income tax). This means it is also worth having some form of valuation on the property at or around its 36 month as a let property to establish the value of the asset at its date of becoming liable.
You also have a personal Capital Gains Tax threshold of £10,100 currently below which no tax is due, so if you are married or in a civil partnership having the property held on a joint tenancy or tenancy in common basis will allow you to use both your tax thresholds up to £20,200. To work out any tax owed take the sale value of the asset, less any costs and applicable tax threshold and the value at its date of becoming liable the multiply by 18%.
So if you let a property worth £120K in 2005 and sold it this year for £150K with costs in the four years of £3k then you would owe £30K less £3K, less £10,100 which = £16,900 taxable gain then multiply £16,9K by 18% giving tax due of £3,042. In the same situation for a married couple where the property was held in joint names you would instead take the gain of £30K less £3K costs, and £20,200 tax exemption giving £4,800 taxable and tax owed of £864.
Capital Gains Tax is a complex area and there are other factors which may affect your tax liability, and it should be remembered that taxation policy can change in each government budget. For more information or to speak to a mortgage broker call 08454594490. Seek independent taxation advice for an exact analysis of your tax liability and guidance on tax mitigation.
Question – I am intending to let my property which has a residential mortgage on it, what should I do and is this ok?
Firstly it is a typical condition of almost all residential mortgage contracts that the property should not be let without the consent of the lender. So you should always speak to your lender first and see what they say.
Most lenders will be relatively helpful with this as there are numerous reasons people choose to let what was once their home and it’s a very common occurrence. They may want to change the mortgage contract to a buy to let type or in some circumstances change nothing until the current mortgage is out of its initial term.
A lender is unlikely to give you a positive response though if you only entered into your mortgage contract very recently. If they did then very few people would bother paying the higher interest on a buy to let mortgage and would simply take a residential mortgage and switch it a week later.
You will also need to look at your buildings and contents insurance as it will very likely invalidate this policy if you are not the main occupant. Tenants are more likely to ruin a property than the owner so your home insurance may be a little more expensive, and last but not least you need to make sure you comply with all the regulations around being a landlord as regards gas inspections and using a secure tenant’s deposit scheme to avoid any litigation in the future.
As usual if your need further information about this call 0845 4594490 to a speak to a mortgage advisor about your own circumstances.
Question; I want to buy a property and let a room or rooms out, is this a Buy to Let?
In short probably not if you or one of your direct family members occupy 40% or more of the property this will be classed legally as a residential mortgage.
The exception would be where you are buying a block of flats or converting a property to flats and your personal flat is less than 40% of the buildings total floorspace.
If they aren’t flats then you will occupy the public rooms too so unless your property has a very large number of bedrooms it would usually mean you occupy more than 40%.
If you are thinking of doing this however it is common for sub letting to be disallowed as a condition on a residential mortgage contract so always consult a mortgage advisor about the legal implications.
Just a quick post today to say our website www.rightmortgageadvice.co.uk has recenly been re-launched including lots of new content, online quote forms, mortgage calcultors and much more.
Theres lots of new information about other areas of our business including Commercial Insurance, Key Persons’ Insurance, Shareholder & Partnership Protection plans, our conveyancing partners, Life Insurance, Critical Illness cover, Permanent Health Insurance, Home Insurance and much more so if you haven’t stopped by recently drop in and take a fresh look.