Buy-to-Let Lifetime Mortgage

What Does A Buy-to-Let Equity Release Lifetime Mortgage Entail

Now you can give your retirement income a boost when you take out a buy-to-let lifetime mortgage. Better yet, you can make sure your property portfolio also gets a boost so you can take care of your golden year needs.

As a landlord, you’ll know that there isn’t actually a limit to the number of properties you can have. And, with property prices appreciating more and more rapidly, people want to get a piece of the action.


That being said, you’ll obviously need money to buy them in the first place. If you’re a 55-year-old homeowner or older, you could potentially use that to buy more properties on a buy-to-let basis. It’s called a BTL Equity Release product. This article will help you through all the necessary costs that go with BTLs, all their features, and the criteria, terms, and conditions.

A quick note:

With BTL mortgages, you take a new loan out on your home, which you don’t need to repay until you pass away or go into long-term care.

What’s a Buy-to-Let Mortgage?

Buy-to-let equity release products or plans are for people looking to borrow against a buy-to-let property or buy one. As with multiple equity release1 providers, the buy-to-let home shouldn’t be occupied by the owner and must be rented out under the Assured Shorthold Tenancy Agreement2.

Simply put:

The different options this plan provides are lump-sumor regular income, roll-up, or voluntary standard repayment plan. These are all buy-to-let. So, if you want to rent a house or a landlord wanting to enlarge your BTL property investments, these investments can benefit your tax and retirement planning. Consult a financial adviser to start making plans.

Let me tell you something.

The loan will be fully paid off, as well as accrued fixed interest when you pass away. When you die or move into permanent care, your provider will sell you, and that profit is used to repay the new loan.

There’s more.

Buy-to-let remortgaging to release equity is another option. Some landlords remortgage their property investments to remove equity from their property to buy another house. This method of releasing equity through remortgaging might be the most commonly used by landlords.


If you’re not at your retirement age yet and you don’t want to remortgage, there are other ways to release equity from your buy-to-let.

The History of Buy-to-Let Equity Release

Equity release, from 2009, has had buy-to-let property mortgages available via lifetime mortgages. These loans initially required a short-hold tenancy agreement to be in place, and the rental income originally had to pay for any interest charged by the provider of the mortgage.

However, 2013 introduced various efforts of rethinking landlord equity release schemes and their potential. Since then, interest rates have decreased drastically, flexible equity release plans have been developed, and different repayment options have been designed.

Let me tell you something:

Buy-to-let landlords have been required to pay extra stamp duty levies on their second home buys, and there are tax relief reductions. These tax relief reductions can be claimed on BTL mortgages (interest-only). We also have to mention the interest-only time bomb effect, which affects the rental sector. So, providers have introduced higher stress testing, which caused older BTL mortgages to be shortened or not renewed.

Simply put:

This caused investment landlords to look for other income sources, which can allow them to keep their current investment and income.

You might be wondering…

How Do Buy-to-Let Lifetime Plans Work?

Instead of using monthly payments to repay your mortgage as with the standard mortgage plans, BTL mortgages allow you to borrow money to buy a property to rent out so that you get rental income payments.

Your provider will consider the house’s potential rental income to determine how much you can borrow when you’re buying a home. It lets them decide whether they can approve a new loan. In other words, they want to see if your income will be able to pay for the new loan or not. For the most part, providers will require you to have a 25-30% rental income more than the mortgage’s repayments.


Sometimes, providers will look at your salary as well. With some providers, if it’s the first time you apply for a BTL mortgage, they may know your salary to ensure you’ll be able to repay the mortgage.

A piece of advice:

Have some evidence ready for how you’ll be able to repay your mortgage if the house isn’t rented for an extended period. Why? Some providers might ask you for it since it’s a risk factor with rental homes. Otherwise, you’ll risk being denied a second mortgage.

Best of all:

If you’ve been renting out a property for a long time, your provider will see that part of your property portfolio as evidence that you’re able to repay a mortgage through rental income. Meaning, your account will show how the investment property pays itself off through rental income. When looking at your level of affordability, any provider will be satisfied.

5 Key Features of Buy-to-let Mortgages

BTL mortgages have specific differences from standard mortgages. Some features are:

  1. Higher fees and fixed interest rates.
  2. 25% minimum deposit of the property’s value. Some may be between 20-40%, depending on your provider.
  3. Mostly, BTL products work with voluntary repayments. Meaning, instead of rolled-up interest, this partial plan lets you repay up to a certain percentage of the initial loan annually (depending on the plan provider) without penalties.
  4. The Financial Conduct Authority (FCA) doesn’t allow most BTL mortgages. With the exceptions, of course. For example, if you want to rent out the house to close family members, the FCA might approve it. These are also known as consumer buy-to-let mortgages. They’re evaluated similarly to the strict affordability rules that need to be in place for a new residential mortgage to be authorised.
  5. The advising, planning, lending and governing of BTL mortgages are all under the same laws as standard mortgages authorised and controlled by the Financial Conduct Authority (FCA3).

Secured loans are also known as second rates. Secured loans are outstanding if you want to keep your current mortgage, but you don’t want more from your provider. Rates for these loans are a bit higher than other standard mortgages, so just keep that in mind.

Who Can Qualify For a Buy-to-Let Mortgage?

You can qualify for a BTL mortgage if:

  • You want to invest in properties.
  • You can afford and understand the risks associated with property investment.
  • You’re already a homeowner, either outright or with a mortgage.
  • Your property’s value is a minimum of £70,000 and a maximum of £6 million.
  • Your property must be in the UK.
  • Your credit score is excellent, and you aren’t limited too much by other loans.
  • Your annual salary is £25,000 minimum. If you earn less than the minimum, it’ll be more challenging to get an approved BTL plan from a provider.
  • You’re older than 55 and younger than 90.

Any other qualification requirements will depend on your provider. Interest is also charged on your loan amount and can be paid off with the loan.

Here’s the thing.

You receive money as a lump sum or a monthly income with interest charged interest to the loan amount. Both the loan plus interest needs to be repaid at the end of your mortgage plan. Just be aware of the fact that there might be additional charges involved; like early repayment charges.

What Does a Buy-to-Let Mortgage Cost?

Before taking out a BTL mortgage, you should know about all the costs to budget properly. These costs are:

  • Financial adviser fees – they’ll help you to put the plan in motion.
  • Arrangement fees – this is for your provider.
  • Solicitor fees – legal representation is essential.
  • Property valuation fees – before the mortgage is approved, providers need to know the property value.

Most providers ask the same fees, and it’s a total of roughly £1,500-£3,500. Once again, be aware that there might be additional charges involved; like early repayment charges.

How Much Can I Borrow with the Buy-to-Let Lifetime Mortgage Plan?

Your loan amount depends on your specific circumstances, your property portfolio and the mortgage provider. Most equity release providers look at:

  • The youngest homeowner with a minimum age of 55.
  • A £70,000 minimum property value.
  • Your health and lifestyle. If you have any specific medical issues or illnesses, you can get a bigger loan.

As an estimation, you can get 20%-50% of the equity in your property as a loan. There are also online calculators for you to calculate the exact amount you qualify for.

But, let me tell you something:

The term ‘adverse credit’ is used to describe a poor record of a person’s repaying credit commitments. If you have adverse credit, you might have negative payment information on your credit record. Many people in debt worry that it’ll have a bad impact on getting approved for a BTL lifetime mortgage.

That being said…

Real estate is one the most secure investments out there. Therefore, buy-to-let mortgages were designed to enjoy financial freedom once you’re retired, and so you can enjoy the benefits of owning a BTL property.

What are you waiting for?

Ask your financial adviser online right now and ask them to explain the application process. There’s no such thing as too many investments!

Remortgaging Residential To Buy-to-Let

If you’re an ex-pat looking to go into the buy-to-let investment market, you can start by renting out your previous. Renting out your home when moving overseas is a widespread way to keep a property investment in the UK.


Let’s say you’ll only be living abroad for a few years and you don’t want to sell your current family home. Let’s say you want to have a property in the UK as an investment, but you’ll never move back. Either way, you’ll have to refinance to a BTL mortgage from your current residential or standard mortgage.

Let’s take a look at a few BTL mortgage examples…

Comparing Some Buy-To-Let Mortgage Deals

ProviderMax LTVTypeRateAPR
TSB60%Fixed (5 years)4.44% variable3.6%
Virgin Money60%Fixed Cashback (5 years)4.54% variable3.9%
HSBC UK60%2-year tracker4.6% variable4.2%

Common Questions

What's A Buy-To-Let Mortgage?
How Do I Get A Buy-To-Let Mortgage?
Is A Buy-To-Let Mortgage A Good Idea?
Who Qualifies For A Buy-To-Let Mortgage?

In Conclusion

As a landlord, you’ll know that there isn’t actually a limit to the number of properties you can have. And, with property prices appreciating more and more rapidly, people want to get a piece of the action.

With BTL mortgages, you take a new loan out on your home, which you don’t need to repay until you pass away or go into long-term care.

So, what are you waiting for? Get a BTL mortgage today and boost your retirement income in a flash!

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