L&G are going to be trialing a new buy to let product at the end of Q1. The specifics of the plan are not yet known but it is likely to have some similarities to the product previously offered by Newlife, the company that L&G purchased to get in to the ER market.
This is a niche product and exciting news for the sector. The product was previously available to landlords and allowed them to raise cash from their property portfolio without having to sell. It was also extended to 2nd properties and holiday homes, but as yet it’s not clear what exactly will be on offer.
The scheme will be available to landlords over the age of 55 who will be able to convert the equity in investment properties into tax free cash. It is thought that the product will be on a roll up of interest basis with the debt being repaid on death or when the house is sold if earlier.
As with traditional lifetime mortgages, the loan amount will be based on the age of the youngest applicant (if applying as a couple) and any existing charge on the property will need to be paid off prior to completion.
Examples of how this equity release could help older investors include:
1. Releasing money to be used towards retirement expenditure
2. To supplement pension income in drawdown
3. By not selling the property the landlord can benefit from any future escalation in the value of the property. In addition, investors can avoid potential capital gains tax on ownership of a 2nd home.
If you feel that this product could be of interest to any of your clients, please get in touch with Release My Equity now. Further information on this produt and its launch is available.