Canada Life entered the equity release industry following the acquisition of Retirement Advantage in 2018. Previously, Retirement Advantage were formed by a re-branding of MGM Advantage, following the purchase of former equity release lender called Stonehaven Equity Release.
Canada Life have now introduced a brand new line of products to the equity release marketplace. These buy-to-let equity release schemes are available to BTL landlords who want to capitalize on the equity in their second home. Through these buy-to-let lifetime mortgages, landlords are able to let out their properties while also using to capital raised via equity release.
With the Canada Life Landlord Voluntary Select schemes, homeowners are able to pay up to 10% of their initial loan amount every year without incurring an early repayment charge.
Landlords must be between 55 and 90 to be eligible for the buy-to-let options with Canada Life. If borrowing jointly, the youngest borrower must not be older than 90. Properties must have a valuation in the range of £70,000 and £6 million. If the property is valued over £6 million, it can still be reviewed on case-by-case basis. The potential loan amounts range from £10,000 to £750,000.
The property must also be located in Scotland, England or Wales. It must be let out under an Assured Shorthold Tenancy, or AST, that does not exceed 12 months, before the completion of the loan. It is required that any deposit paid by the tenant be protected by an authorized tenancy deposit scheme via the Government. This must be documented prior to loan completion.
There are a number of applications and tenancies that are not permitted with this line of products. Applications from limited or limited liability partnerships are not allowed. Tenancies not permitted include housing associations, council, students, companies, family members or relatives, tenants without the Right to Rent, DSS tenants and tenants with diplomatic immunity.
Canada Life is known for its attractive early repayment charges schedule. This extends to its buy-to-let products. The charges are fixed for 8 years after the loan’s completion. 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 applied for years 9 and above.
The LTV range for the Canada Life Voluntary Select Option starts at 19% at age 55 and goes up to 44% for ages 80-90.
The minimum allowable repayment back to Canada Life for the Landlord on the Voluntary Select Option is £50, and the maximum is the 10% allowance. The first payment with this option can be made on the day following the loan’s completion. There is no limit on the number of payments that can be made. Payments are accepted via bank transfer, cheque, standing order, and debit card. Homeowners are not penalized if they do not pay their full annual payment allowance of 10%.
With the Landlord Options suite of products, homeowners are also eligible to apply for additional borrowing in the future. The homeowner must stay within their original product LTV range and is not allowed to switch to a new product. The minimum amount for additional borrowing is £4,000 and there is no completion fee applied.
The Canada Life Voluntary Select Option is most attractive to those homeowners who want to control the interest accruing on their loan as much as possible. With the option to pay up to 10% of the initial loan amount every year, landlords are able to limit their loan balance without incurring any early repayment charges. If a landlord is concerned about potential interest-roll up, the Voluntary Select Option is a good option for them.vThe entire line of Canada Life’s Landlord Options is suitable for landlords who both want to let out their homes and still capitalise on an equity release scheme. This could be for a variety of reasons including adding more properties to their portfolio, inheritance tax and capital gains tax mitigation.
Call the Compare Equity Release team on 0800 678 5169 for further details, or to request your personalised Canada Life Buy-to-Let Voluntary Select Lifetime Mortgage quote.