Equity Release on rented out property?

Whiterose23

Hi, advice/experiences needed…

I'm looking to rent out my house so I can rent a smaller property a different area of the country, basically so I can 'test' the ground before ultimately selling up and moving, hopefully in a couple of years or so.

I'm aware of all the costs/pitfalls involved in being a landlord etc. I am 61 years old and have received a quote to switch to an Equity Release mortgage. My LTV is 21% and my house is valued at £260,000.

I'm aware a normal Equity Release product would require me to live in the property, but wonder if anyone has experience of using Equity Release for a house that is rented out?

Thanks in advance for any input.

MWT

This is a very niche product with limited lenders and you are not likely to find many on here with experience of what is in effect a BTL Lifetime Mortgage.

One thing that does stand out as a potential issue is the plan to sell in a couple of years as the Lifetime products in general are aimed at longer term commitments and tend to have quite high early redemption charges, so make sure you fully understand the cost of getting out early.

Also look at the options to move the product to a 'normal' residential lifetime product as it is often possible to move a normal lifetime product to a different property (subject to value/suitability etc.) but not sure if that is an option here as it would reduce/eliminate the ERC.

saajan_12

Why do you need an equity release mortgage? Vs say a normal consent to let if its for a limited period of time and then switch to a Buy To Let mortgage. The affordability is then based on your rental income rather than your salaried work (and hence less affected by pension age).

MWT

https://forums.moneysavingexpert.com/discussion/comment/81873425#Comment_81873425

It is a fair question, but I had assumed they need the income from the rent to cover the rent they are going to be paying, hence going down a route that does not require the interest to be paid, as they didn't mention paid employment…