If you’re aged 50 or above and are eager to get onto the buy-to-let ladder then I have great news for you. The range of mortgages available to older investors is currently ballooning.
A recent study from Which? showed that, of the 2,057 buy-to-let mortgage products currently on the market, some 1,341 — equating to 65% of the total — have a maximum age limit at the end of the loan term of 85 years and above.
Using data from Moneyfacts, the study was able to ascertain around 30% of mortgage products have a maximum age of 85 years, while 9% have a maximum age of 95. Meanwhile, exactly 20% of current loan products have no age limit at all.
Commenting on the study, Which? said: “After years of struggling to find lenders willing to provide them with mortgages in later life, older borrowers are now being spoiled with options as high-street banks and building societies clamour to launch new products and change existing terms to meet an ageing population.”
Worth the trouble?
The emergence of the challenger banks is slowly eroding the dominance of the UK’s established lenders and, in this respect, things for the buy-to-let investor have never been so good. As well as benefitting from looser lending criteria, landlords are also enjoying an environment of plunging interest rates, lower deposit requirements, and an ocean of fee-based incentives.
This doesn’t, however, mean that now’s the time for people who would otherwise been precluded from buy-to-let on account of their age to now plough in.
Sure, mortgage products may be more consumer-friendly than they’ve been before, but the financial advantages afforded by low rates are overshadowed by the raft of tax changes, including stamp duty hikes and reduced relief on mortgage interest.
And that’s before you even take into account the cost and aggravation traditionally associated with owning and operating a rental property, from letting agent fees and safety checks, through to unexpected faults and breakages occurring at any hour of the day (or night).
A better place for your cash
While stock investing is also known to offer its own unique selection of stresses, with profit warnings, boardroom tussles, and eye-popping share price drops all par for the course, participation in the equity markets still remains a superior method of making your money work for you, in my opinion.
What’s more, with shareholder dividends hitting record peak after record peak, it could be argued that there’s never been a better time to move into stocks and shares and away from the increasingly-problematic buy-to-let sector.
If you’re seeking access to the property market why not consider industrial property provider A&J Mucklow Group and its 4.3% forward dividend yields? Or how about 5.1%-yielding brickmaker Ibstock, or homebuilder Persimmon and its eye-popping 11.1% yield?
My advice would be to look past buy-to-let and plough any surplus cash you have into buying stocks and shares. I own shares in some of Britain’s biggest housebuilders and know first hand just how big some of the returns can be. So why not take a look?
Royston Wild owns shares of Ibstock. The Motley Fool UK has recommended A&J Mucklow Group. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.