How to Refinance a Buy-To-Let Mortgage Using BTL Equity Release
By Mark Gregory on
Here we discuss how Kim managed to refinance her existing buy-to-let mortgage with a new equity release plan, ensuring she maintained her goal of continuing her monthly repayments.In the next of our continuing series of articles on the theme of Buy-to-Let equity release, we explain how an existing BTL Landlord with a mortgage imminently expiring, found Retirement Advantage’s BTL Lifetime Mortgage ideal in meeting her immediate and future needs. This solution met her goal of maintaining her monthly interest only payments in a BTL equity release mortgage that would run for the rest of her life, thus enabling her to retain all her rental income.
Status: Kim Thackery is a retired single Buy-to-Letter with a current mortgage with Barclays.
Background: Kim took out a £130,000 interest only BTL mortgage with Barclays on a property in Lymington in 2004. Barclays are calling in the mortgage and it’s now due for repayment. The lender will not consider a remortgage due to her current age and has demanded that the mortgage be repaid immediately.Fortunately, the property has increased in value from £200,000 in 2004, to £450,000 in 2017, which has left her with a good loan-to-value ratio. Traditional lenders will not lend to Kim, and she is now forced to sell the property in order to repay Barclays.
Solution: Kim sought independent equity release advice & was recommended a Retirement Advantage Buy-To-Let Interest Select plan which is their newly launched Landlord Lifetime Mortgage. This BTL equity release scheme allows landlords over the age of 55 to remortgage and maintain a lifetime interest only BTL loan.
What Kim achieved by remortgaging
- Kim was able to maintain her rental income being generated via her buy-to-let property without any affordability or income checks
- Retirement Advantage’s Landlord Interest Select plan provides Kim with the opportunity to maintain her interest only mortgage payments, thus keeping the balance at the same level for her lifetime
- Kim avoided crystallising a potential capital gains tax liability due to the rise in her property value which would have arisen if she’d sold the BTL property
- She still owns an asset which produces in the region of a 4% yield, equating to £18,000pa rental income
- Kim managed to avoid associated costs involved with selling the property, such as estate agent costs and legal fees
- The potential in an escalating property value means Kim can benefit from future capital gains on the asset as long as she maintains her monthly interest only payments
- Kim has avoided the stress and emotional strain of going through a sale of an asset that was providing her with a steady income
Categorised in: Buy-To-Let Equity Release, Equity Release, Equity Release Referral Partners, Interest Only, Remortgage, Retirement Advantage
This post was written by Mark Gregory