Equity release now available on buy-to-lets

Buy-to-let landlords faced with financial issues will soon have the option to free up equity from their rented properties as a new product range is launched.

Pensions business Retirement Advantage has released a series of equity release products for landlords, which for the first time extend to buy-to-let properties, rather than just private residences.

Equity release schemes have proved controversial in some quarters, as they free up cash from properties, which is usually paid back to the lender upon the sale of the property, after the owner has passed away.

This is a growing market; over £2 billion was released from homes in 2016 and Legal & General has predicted this will rise to £3 billion this year.

The landlord options give borrowers the choice of paying loans off in full at the end of the loan, paying loan interest during their lifetime of paying up to 10 percent of the loan value each year, without incurring any early repayment charges.

Under the product portfolio, landlords may apply for loans on more than one property, so long as these are valued between £70,000 and £6 million.

The company confirmed that tenants would not be forced to leave early if a landlord dies.

Andrew Turner, chief executive at Commercial Trust, stated:

“Clearly in the present climate, with mortgage interest tax relief being phased out and the introduction of the 3% stamp duty surcharge, buy-to-let landlords have found cash liquidity more of a challenge.

“One option landlords can now take is to consider these equity release products, although we believe that the Government can do a lot more to help buy-to-let investors, by reversing some of its recent policies.

“Equity release products may not be the answer for every landlord scenario and we would urge investors to seek expert advice before entering into any commitments.”

This information should not be interpreted as financial advice. Mortgage and loan rates are subject to change.

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