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Newlife Resurrect Equity Release on Buy-to-Let Properties

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Last updated on 27 June 2023

This week saw the rebirth of a special buy-to-let equity release plan not seen for the past two years.

Newlife mortgages have relaunched their popular Landlord Lifetime Mortgage plan, aimed at helping landlords release equity form their buy-to-let property portfolios.

The major advantage of this unique form of equity release loan is the fact landlords do not need to sell in order to raise this cash and it can help defer capital gains tax during the process.

Newlife have also extended the 2^nd property equity release theme onto holiday homes and holiday cottages which are used for family purposes. Both types of these equity release schemes add variation and build upon the strength and flexibility being shown in the retirement mortgage market.

Landlord scheme in detail

Based upon the established principle of the roll-up lifetime mortgage, it helps landlords over the age of 55 to convert the equity in their second home into tax free cash. This type of mortgage requires NO monthly repayments and only needs to be repaid on death or when the house is sold, if earlier.

The buy-to-let property must have a minimum valuation of £150,000 and be located in England or Wales. The minimum initial equity release loan amount is £25,000 and this can only be taken on a lump sum basis. Further top-ups can be taken in 3 years time in amounts over £10,000.

A portfolio of upto five investment properties can be utilised subject to a maximum lending limit of £250,000. To calculate how much can be borrowed you need to provide both the property value and the age of the youngest applicant. Loan-to-values start at 13% for some aged 55, increasing by 1% each year thereafter upto an overall maximum of 42% of the property valuation at age 85+.

Should there be an existing mortgage on the rental property then this will need to be either repaid prior to application of the landlord loan, or be paid off from the equity release proceeds on completion.

Newlife help buy-to-let investors financially

The fact there are no monthly repayments means that retired landlords can increase their retirement income with this buy-to-let equity release mortgage.

Some examples of where the landlord buy to-let equity release plan can help are: –

1. By repaying an existing interest only, or capital and interest mortgage, there will be no further monthly payments to make. Instead this money could then be used towards their retirement expenditures.
2. The capital lump sum can be used to supplement pension income. One investment this could be placed into is an annuity. By placing the tax free lump sum into a pension annuity would convert the release of equity into income. Should ill-health persist then an enhanced annuity could be purchased, thus providing even more income.
3. By NOT having to selling the rental property means the landlords beneficiaries can still benefit from any escalation in the value of the property in the future. Additionally, by not having to sell means the avoidance of potential capital gains tax on ownership of a 2^nd home.
4. The interest charged on the landlord scheme can be offset against income tax due on the rental income received.
5. For higher rate tax payers the savings can be even more significant. The Newlife mortgage scheme takes advantage of the fact that profits in the eyes of the revenue are only revalued on death.  Therefore, when the rental property is transferred into the landlord’s estate on death, the capital gains tax (CGT) is only due once the property is eventually sold. This could be 12 months later. At that point CGT is only due on any escalation in the property value since it passed into the estate. The property has effectively & potentially been transferred CGT free.

As the recent financial news has stated, 2013 is seeing the biggest rise in the popularity of equity release schemes. Therefore, such plans as Newlife mortgages first and only buy-to-let equity release plan can only enhance the growing flexibility and captured marketplace being exhibited.

For landlords interested in equity release on their rental properties call 0800 028 3142 or click the following link to request a buy-to-let equity release quote.