When Rod Smith tried to remortgage so he could invest in a buy-to-let property, he was turned down for being too old – until he came to Ipswich Building Society, who pride themselves on taking a more flexible approach.
Rod Smith, 67, is a retired GP who lives in Reading. A few months ago, he started looking into the possibility of remortgaging in order to raise capital for a buy-to-let purchase. 'It's partly an investment, partly to help one of our kids move out and get on the property ladder,' he explains.
Rod had owned buy-to-lets before, in London and Newcastle, so he understood the market. All he needed was the capital. 'We only had £27,500 left on our own mortgage,' says Rod. 'So it was easier just to remortgage and then do the buy-to-let purchase.'
Rod wanted to borrow £300,000 jointly with his wife. He receives a GP's pension and still does some work for the NHS. But as he quickly discovered, it wasn't his income that was the problem – it was his age. 'I approached both my existing lender, HSBC, and my main bank, NatWest.' he explains. 'But they both had age thresholds for the term of the loan – 70 or 75, from memory – so they turned me down flat.'
For Rod, the most frustrating thing was the rigid approach. 'I got the sense that both banks were just following a script, or applying a rule, not building a risk profile,' he says. 'They didn't really understand that I was actually quite a good prospect. It seemed daft, because I'm a much better bet than I was 20 years ago, when they'd lend me whatever I wanted.
'I've got my pension to cover the payments, and if I die, my executors can just sell the property to pay off the loan, so I'm not sure what they were worried about,' adds Rod. 'Presumably, someone 20 years younger would have been offered a loan, which to me just seems senseless.'
Fortunately, there were other options. 'I'd read about Ipswich Building Society in a Sunday paper, where it said they were flexible,' recalls Rod. 'As a GP, I often needed to evaluate people's health, so I know something about assessing risk. IBS took what I'd consider to be a very sensible approach. They didn't just stick to a script, but judged our financial situation on the facts.'
Following an initial phone conversation, things moved forward quickly. 'They gave us an in-principle decision very quickly – it might even have been the same day,' says Rod. 'And they were also flexible over whether we went for interest-only or repayment.' In the end, they plumped for 50% interest-only and 50% repayment, over a term of 18 years.
Now the Smiths are searching for the right property near their home in Reading. With the extension of the east–west Crossrail route to the town, the area should be an excellent prospect for future growth and rental yields – and the Smiths can take advantage, thanks to a lender who was willing to take a human approach.