Canada Life, previously known as Stonehaven Equity Release/Retirement Advantage, has always been known for its array of retirement equity release products, most notably the level of customisation that those products offer. They have now introduced a series of new products to their existing portfolio. Those products are targeted toward landlords who still want to capitalize on the equity in their property portfolio. This range of buy-to-let products is completely new and unique to the equity release marketplace.
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.
There are eligibility criteria applied to both the homeowner and the property being rented out. The property must be valued between £70,000 and £6 million, though properties that exceed the £6 million maximum can still be reviewed on a case-specific basis. To qualify the property must be located in England, Wales, or Scotland. Please call 0800 678 5955
for your personalised Landlord Equity Release Key Facts Illustration.
The property also has to be let out under an Assured Shorthold Tenancy, or AST, before the completion of the loan. That AST must not exceed a total time period of 12 months and it is required that any deposit paid by the tenant be protected by an authorized tenancy deposit scheme via the Government. Documents must be shown to prove this before the loan has reached completion.
The homeowner must be between ages 55 and 90 and if borrowing jointly, the youngest borrower must be 90 or younger. The potential loan amounts range from £10,000 to £750,000.
Canada Life does not accept applications from limited or limited liability partnership companies and there are a variety of tenancies that are not permitted under this suite of products. Those tenancies include companies, housing associations, council, students, relatives, tenants without the Right to Rent, DSS tenants and tenants with diplomatic immunity.
Canada Life is known for its flexible early repayment charges and those same charges extend to the landlord 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 9% at age 55 and goes up to 34% for ages 80-90.
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.
All of the Canada Life buy-to-let options are ideal for homeowners 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.
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 Landlord Voluntary Select Buy-to-Let Equity Release Mortgage, please contact the Equity Release Supermarket team on 0800 678 5955