How To Re-Mortgage When You're 102!
Re-mortgaging when you're getting on a bit may not be the disaster you think.
If, over the weekend, you read the story about the 102-year old man who had taken out a 25-year mortgage on a buy-to-let property, your jaw probably hit the floor just as mine did.According to the various press reports, the company that brokered the deal for him (Mortgages for Business) enabled him to borrow £200,000 on the basis that the interest-only payments of nearly £1,000 a month would be met by the assumed rental income. And, of course, that house prices would rise sufficiently over time for him to make a profit when the property was eventually sold.As is often the case when you delve a little deeper into what you read in the newspapers, the deal wasn't quite as it seemed.For a start:This deal actually happened last November - - the newspapers have only just picked up on it;Our 102-year old chap was a very experienced investor with a portfolio of rental properties that he was using for equity release purposes;The re-mortgage of his properties was designed mostly to mitigate the Inheritance Tax bill that his estate (and his children) would be lumbered with in the event of his death;He has, since, died.This man was not re-mortgaging his own home to release money for his old age -- he was simply releasing equity from his portfolio of properties because it made good business sense to do so.A buy-to-let mortgage is not the same as a residential mortgage -- it is a 'business mortgage' -- and banks do not lend money on BTL properties unless the income from the property can service the debt. And mortgage debt can be written off against assets on death. The various Inheritance Tax laws enabled this man to use the mechanism to ensure his children would benefit more from his investments than the taxman.So this (sadly, deceased) businessman was actually being rather more astute than many of us may have initially thought.For me, there are three things that come from this story. Firstly, your brain can still work when you're as old as 102. Secondly, there are lenders out there who won't dismiss you just because you are 102 and, finally, you shouldn't believe everything you read in the newspapers!