A new equity release product has launched, aimed at buy to let (BTL) investors looking to release cash from their rented properties.
Equity release schemes are aimed at property owners who want to release equity from their home – either releasing the monies as a lump sum, in several smaller amounts or as a combination of both.
At the moment, homeowners can take out equity release plans on their own residence. As we reported last month, equity release sales soared by 44% in the first six months of 2017, with almost 100 retired homeowners a day having taken equity release plans and cashing in £1.25 billion of property wealth.
With BTL investors’ profits being squeezed over the last few years following a raft of different reforms including changes to mortgage tax relief, this new product may be welcomed by cash-poor, asset-rich landlords.
The “landlords options” range from pensions company Retirement Advantage gives investors the choice to pay off the full amount at the end of loan; pay the interest on the loan during their lifetime; or pay off up to 10% a year without an early repayment charge. Interest rates range between 6.0% and 6.45%, depending on which option is chosen.
The Telegraph reports that while equity release schemes for landlords have been offered by some lenders in the past, this new range is believed to be the only one currently available.
Retirement Advantage confirmed that tenants will not be forced out of rented properties early when a property owner dies.