BTL mortgage term limits

[sackofspuds]

Apologies in advance that this is such a newbie question.

It's about the maximum term for a BTL mortgage.

Suppose my proposed BTL property meets the mortgage criteria in terms of LTV and the percentage by which the rent exceeds the mortgage interest, do mortgage lenders expect the mortgage to be repaid by the time I reach say state pension age?

Do some lenders have different criteria concerning the term?

[Alaric]

do mortgage lenders expect the mortgage to be repaid by the time I reach say state pension age?

Isn't it usual practice for BTL mortgages to be interest only? Essentially it's business finance where it would be assumed that the rental income is perpetual. That contrasts to a domestic mortgage where the interest and capital come from the earnings of the borrower.

[JonE]

Suppose my proposed BTL property meets the mortgage criteria in terms of LTV and the percentage by which the rent exceeds the mortgage interest, do mortgage lenders expect the mortgage to be repaid by the time I reach say state pension age?

Do some lenders have different criteria concerning the term?

Yes. The criteria they apply and the parameters for each criterion can vary between lenders and, significantly, can vary over time for each lender.

Maximum LTV and the interest-coverage factor aren't constant across all lenders. Some impose a maximum age at the end of term but it isn't necessarily the same for each of those (such as being fixed as state pension age for the youngest borrower or 70 or whatever).

I've been refused an interest-only BTL mortgage by a lender (which was very prominent in the market around 2000-ish) on the grounds that they only did capital repayment BTL loans (although I already had an interest-only loan from them). Even for interest-only loans I've also encountered requirements for a minimum level of <i>earned</i> income, for evidence of a repayment vehicle, for a life insurance policy paying more than the loan amount and for various other weird things. Hopefully, the lenders have gradually acquired a better understanding of the market sector after all this time and that may mean that requirements are tending towards consistency across all lenders - but not necessarily.

You need to do the research in detail and in the light of your own circumstances but if your research indicates that you'll have problems meeting some requirements then you may find that a good broker can earn his salt. A broker may have access to deals that individuals can't access and there have even been times when it has been worth my while to pay a fee: sure, the broker also received commission and did pretty well out of it but I did better out of it than I could have achieved on my own.

Cheers!

[sackofspuds]

Thanks very much, JonE. Very useful and I guess my question was not so daft after all!

Makes you wonder what their criteria would be for a limited company mortgage, not that I was thinking of that. Would they look at the Directors' ages?