I am 55 years old and would like to remortgage a rental property I own in order to release money to pay my wife as we are divorcing. I have been offered a 25-year interest-only mortgage. Do you think I should consult a mortgage broker?
There are a number of issues to consider in determining whether this mortgage term and structure will be right for you. These include how long you expect to keep the property and to carry on working.
As the property is let out, you will need a buy-to-let mortgage for your remortgage. Buy-to-let lenders will typically determine the level of borrowing based on the rental income generated by the property rather than solely looking at your earned income. They will expect the rental income to cover a proportion of the mortgage interest and will apply a stress rate in that calculation too. Criteria can vary from one lender to another, so it makes sense to shop around.
It is commonplace for landlords to structure mortgages on an interest-only basis, as the property will be sold to repay the outstanding mortgage. However, if you prefer to reduce the mortgage gradually, then you may want to consider a repayment mortgage.
Although the buy-to-let market has been more flexible for borrowers wanting to take their loan into older age, there can still be some limitations depending on the lender. You need to consider your long-term plan for the property but it should be possible to maintain the mortgage beyond your anticipated retirement age.
It sounds as if you have some doubts about whether this is the right choice. It may not come as a surprise that I would recommend seeking advice from a broker so you understand all the options open to you.
The majority of buy-to-let mortgages are only available through mortgage brokers, so you should have a better choice of deals as well as getting tailored advice from across the market. As a result, you will give yourself the best chance of getting a better deal than going direct to a single lender.