SAVERS WHO withdraw money from their pensions to buy properties to let are being offered mortgages that last until they are 105 years old.
The new loans that for the first time allow people to borrow throughout retirement, will increase the number of landlords and could push up house prices.
Many older savers have said they would like to invest in property following reforms to pensions, which take effect
tomorrow. The over-55s will be given access to billions of pounds to withdraw and use as they please. However, with house prices rising to £273,000 on average, most middle-class savers’ funds will be too small to buy outright.
In the past banks and building societies refused to offer loans that lasted into retirement, with most asking for full repayment by age 75. Nationwide Building Society, which has 15million customers, will offer the under-70s a loan for up to 35 years.
Private landlords now own almost one in five homes in Britain. By 2032, more than one in three properties will be owned by landlords, government figures suggest.
Economists have said that the increase in landlords competing to buy properties is boosting house prices, which are still increasing at 8.4 per cent a year despite uncertainty over the general election outcome, according to latest data from the Office for National Statistics.
Three quarters of the two million landlords in Britain view their property as their pension, according to research from BDRC, a financial consultancy.
The move to offer buy-to-let loans to retired customers, however, contrasts with banks’ stances on residential mortgages, where customers are being rejected in their fifties for loans stretching beyond their 70th birthdays.
Mark Harris, the chief executive of mortgage broker SPF Private Clients, said: “Getting a buy-to-let mortgage should be easier for an older borrower than obtaining a residential loan because the rental income that covers repayments should not fall when the landlord retires, while the employment income used to pay for a residential mortgage does.”