Speaking at The Buy To Let Market Forum in Birmingham, Steve Griffiths, head of sales and distribution at Kensington, said that while many older borrowers were interested in property investment not all had the necessary know-how.
A survey of more than 900 working over-40s revealed a lack of understanding of buy-to-let mortgages.
Of those surveyed, 45% of pension savers said they were already considering investing in buy to let but 32% of those people said they didn’t know how to go about it. Of that 32%, 12% of people had never heard of a buy-to-let mortgage.
Some 21% of people said they didn’t understand the rules around buy-to-let mortgages
“They didn’t know you needed a buy-to-let mortgage to buy an investment property if you needed mortgage funding for it,” said Griffiths.
Just over a quarter of people said they would get their buy-to-let mortgage from their bank.
“We could probably add that 28% to the 32 [%] a few weeks later when they couldn’t get an appointment with their banks for a buy-to-let mortgage or the guy on the counter gave them a blank look when they asked ‘where should I invest, what should I do and is this for me?’ rather than ‘can I have a two-year fix at 75% but-to-let mortgage’.”
Most respondents did recognise that investing in property did pose a risk their savings with only 4% of the impression there were no risks involved in buy to let.
Griffiths said this meant that the clients you would be talking to about using their pension pots to invest in property were financial savvy to begin with but this didn’t remove the need to discuss the pitfalls as well as the opportunities the market could offer.
The survey highlighted that people looking to property investment for retirement savings did recognise the importance of speaking to an expert; 44% said they would go to a mortgage adviser which Griffiths said was an encouraging sign.
Griffiths said brokers would add value by being able to go beyond advising on the transaction but looking at the whole experience of owning a buy-to-let property, the void periods, repairs, tenancy and tenant types not just the mortgage rate.
