Canada Life | Over 55 Buy-to-Let Voluntary Select Plan

Background

Canada Life entered the equity release industry following the acquisition of Retirement Advantage which completed in 2018. Prior to the take-over Retirement Advantage was formed by a re-branding of MGM Advantage in 2015, following the purchase of former equity release lender - Stonehaven Equity Release. Tracing its roots back to 1852, Retirement Advantage were a specialist in providing retirement products such as lifetime mortgages and retirement accounts.

Canada Life's range of lifetime mortgage uk plans offer a 'design-it-yourself' approach to equity release. Offering a suite of products such as lump sum, interest only lifetime mortgage and voluntary repayment schemes, they have also expanded into Buy-to-Let and Second Home equity release plans. This multi-national life office has introduced a line of products to be used by landlords.

The suite of landlord lifetime mortgages offered is the first of its kind to hit the market since the New Life Buy-To-Let equity release plans introduced many years ago. These allowed landlords to use equity release products on homes that are rented out on a Assured Shorthold Tenancy Agreement. In this unique Buy-to-Let equity release plan, homeowners can capitalize on the benefits of equity release schemes, even if they are not living in the home.

The Voluntary Select Option is one product available in the Landlord Over 55 Buy-To-Let Option suite of products. It allows homeowners to pay upto 10% of the initial loan amount every year without facing any early repayment charge and helps landlords control their future mortgage balance.

Eligibility

The minimum loan amount allowed with the Landlord Over 55 Buy-To-Let Options product is £10,000 with the maximum being £750,000. The minimum age is just 55 and the maximum is 90 years of age. If two homeowners are borrowing jointly, the youngest borrower must be 90 years old, or younger.

The property value range eligible for the Canada Life Buy-to-Let (BTL) equity release is £70,000 upto a height of £6 million. However, properties with a valuation above £6 million can still be reviewed individually. To qualify the property must also be located in England, Wales, or Scotland. Please call Freephone 0800 088 5898 for your personalised Landlord Equity Release Key Facts Illustration.

In order to take advantage of the Landlord Over 55 Buy-To-Let scheme, the property must be let out as a single residence on an Assured Shorthold Tenancy, of not more than 12 months duration before completion. Multiple family dwellings are not eligible.

Applications from limited or limited liability partnership companies are not permitted under Canada Life’s Buy-to-Let products. A number of tenancies are also not permitted including companies, University, Housing Associations, students, Council, family members, tenants without the right to rent, DSS tenants, or tenants with diplomatic immunity.

The property owners should make sure that if they are required to have a license to let their property, they are able to provide a copy of that license during the application process. Additionally, Canada Life's solicitors will need sight of approved certificates for gas & electricity to evidence they have been safety checked.

Under the Buy-to-Let equity release product range, the loan-to-values start from 19% at age 55, and ends at 44% of the property value for ages over 80. These are lower lending percentages than the standard Canada Life equity release product range, but represents the additional risk involved with buy-to-let lending.

Features

With the Over 55 Buy-To-Let Options, the landlord doesn’t need to make any payments toward the interest charged on the buy-to-let mortgage. Instead, the interest is rolled-up and added to the existing loan balance. So, this product is most attractive to those property owners who want a lump sum and not have any repayments that could affect their monthly budget. Canada Life is known for its flexible early repayment charges and those same charges extend to the Over 55 BTL options.

The early repayment charges for the landlord option products are fixed for 8 years after the loan has been completed. For years 0-5 of the loan, the early repayment is 5%. For years 6-8, it is 3% and there is no early repayment charge for years 9 and above. With the Voluntary Select Option, homeowners are allowed to pay up to 10% of the initial loan amount every year without incurring any early repayment charges.

Homeowners who take advantage of the landlord options with Canada Life are eligible to apply for additional borrowing in the future. The homeowner just must stay within their original product LTV range and cannot switch to a new product. The minimum amount for additional borrowing is £4,000 and there is no completion fee applied.

The minimum payment amount with the Voluntary Select Option is £50 and the maximum is the 10% allowance each year. The first payment with this option can be made on the day following the loan’s completion and there is no limit to the number of payments that can be made.

Payments can be made in a variety of ways including cheque, bank transfer, standing order, and debit card. And if homeowners do not pay their full annual payment allowance of 10%, they are not penalized.

The Loan-to-Value range for the Landlord Voluntary Select Option starts at 14% at age 55 and goes up to 39% for ages 80-90.

Options

With the Over 55 Buy-To-Let Options, the landlord doesn’t need to make any payments toward the interest charged on the buy-to-let mortgage. Instead, the interest is rolled-up and added to the existing loan balance. So, this product is most attractive to those property owners who want a lump sum and have the choice of whether to make any repayments in the future.
The Voluntary Select Option is most suitable for those homeowners who want to make a contribution towards their loan every year without worrying about incurring any early repayment charges. This product works best for those homeowners who are concerned with interest roll-up and are also able to afford to make payments.

The full range of Landlord Over 55 Buy-To-Let options offered by Canada Life is suitable for those homeowners who want to let out their homes, but also want the freedom of capitalising on an equity release scheme to help them at, or in-retirement.

Practicalities

All of the Canada Life Buy-to-Let Voluntary Select is ideal for landlords who own one or more buy-to-let properties, and still want to take advantage of an equity release scheme to raise capital. These could be for reasons of mitigating capital gains tax, by not having to sell a rental property, but instead releasing equity to fund other projects.

Additionally, buy-to-let landlords may wish to clear an existing interest-only mortgage, where no endowment or suitable repayment vehicle now exists. Again, rather than having to sell the rental property, a buy-to-let equity release could be used to remortgage the property, thus maintaining the rental income for retirement. Voluntary repayments can replace the disciplined interest-only payments previously.

Landlord equity release schemes could also be used to mitigate inheritance tax. As the mortgage debt rolls-up over time it potentially reduces the net value of the estate, however, rental income can still be remain, again supporting retirement lifestyle.

Other uses can include using the Landlord Over 55 Buy-To-Let to assist with long term care funding, part of a divorce settlement and many more besides.
Our local Equity Release Supermarket advisers are on hand to help discuss and advise on the potential benefits of the buy-to-let equity release plans from Canada Life.

To obtain further information or to request a quotation on the Canada Life Over 55 Buy-To-Let Voluntary Select Scheme, please contact the Equity Release Supermarket team on Freephone 0800 088 5898 today.

Over 55 Buy-to-Let Voluntary Select

Over 55 Landlord Voluntary Select

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