Your browser isn't supported
It looks like you're using an old web browser. To get the most out of the site and to ensure guides display correctly, we suggest upgrading your browser now. Download the latest:

Welcome to the MSE Forums

We're home to a fantastic community of MoneySavers but anyone can post. Please exercise caution & report spam, illegal, offensive or libellous posts/messages: click "report" or email forumteam@.

Search
  • FIRST POST
    • allegedly
    • By allegedly 9th Mar 17, 9:01 PM
    • 16Posts
    • 5Thanks
    allegedly
    Let to Buy an Option?
    • #1
    • 9th Mar 17, 9:01 PM
    Let to Buy an Option? 9th Mar 17 at 9:01 PM
    Hi All,

    I currently own my house outright and it is valued at approximately £115 thousand.
    I have approximately £110 thousand cash saved (small inheritance, ISA and savings).
    I would like to take out a 'Let to Buy' mortgage of approximately £75-£80 thousand to buy another house, valued approximately £190 thousand.
    Can I use the money from a Let to Buy mortgage taken out on my owned property to use to buy the bigger, more expensive house?
    Average rents on properties similar to mine are approx' £500+ pcm.
    I have been finding conflicting views on my access to these due to my age, I am 60 (hence, no access to a 'normal' residential mortgage').
    I have been told there are lenders who will lend interest only for the full twenty five year term regardless of age.
    Is this correct?
    I live in the NW Highlands of Scotland so finding a broker is not quite like it is in the towns/cities.
    Can anyone tell me if what I would like to do is possible and if so, any recommendations for a broker/provider? All advice appreciated.

    My thanks in advance, I have always had sound advice from the good people on here.

    Regards
    Rob
Page 1
    • glosoli
    • By glosoli 9th Mar 17, 9:29 PM
    • 630 Posts
    • 362 Thanks
    glosoli
    • #2
    • 9th Mar 17, 9:29 PM
    • #2
    • 9th Mar 17, 9:29 PM
    It may be an option, essentially it would be an unencumbered buy to let home equity release,

    Normally you can have interest only, on a buy to let mortgage, up to the age of 75 with a number of providers. Generally with interest only, you can borrow up to 75% of the property value, with the repayment strategy being the sale of the property itself.

    With a normal buy to let application, the adviser will only ask for certain expenditures, i.e council tax, insurances, liability payments so on and so forth, generally processed on an execution only basis. However...

    As you have formally lived in the property (and presumably you have no land lord experience up until this point), you would be looking at a consumer buy to let application, which will cut down your options in regards to what lenders would do this. A consumer buy to let is identical to a residential application, in regards to the questions an adviser would ask, and the adviser would need to make a recommendation to you. You are best scouting out options to see what lenders are able to accommodate a consumer buy to let.

    Have you already retired? Or hypothetically, if you did have a 15 year mortgage term, would you be retiring within the term of the mortgage? Would you be able to demonstrate affordability through regular pension income?
    Last edited by glosoli; 09-03-2017 at 9:33 PM.
    • allegedly
    • By allegedly 11th Mar 17, 12:11 AM
    • 16 Posts
    • 5 Thanks
    allegedly
    • #3
    • 11th Mar 17, 12:11 AM
    • #3
    • 11th Mar 17, 12:11 AM
    Hi Glosoli,
    Thanks for your input. Plenty to think about there and yes, I think the next step is to consult an adviser and see how I stand.
    We have reviewed our position and we are closer to £140 thousand held so we'd only be looking for about £50 thousand, so a loan to value of approximately 42% on the property we own. Also, I was inaccurate on the rental figure for a three bed property in the area. It is in fact nearer £750 pm, not the five I said.
    To answer your questions, I am not retired. I am fit and work offshore, overseas mostly and intend to do so as long as I am able, hopefully well past 65. My pension position is not great but should be adequate to cover the repayments (obviously dependent on the monthly amount due) if absolutely necessary. May be a bit naive but I'd intended for the rental income to cover that with the risk of some months where I'd have to cover for non payments etc.
    I have read today of some building societies having an upper age limit of 80-85 but the articles were dated mid last year so I will be calling a few tomorrow plus a couple of broker/advisers I've found on line for more up to date info.
    Incidentally, you're correct in saying I will be a 'first time landlord' so effectively, a consumer buy to let sounds like a correct description, I guess.
    However, I'm relatively experienced in running my own businesses and have good roots in the local building trades/suppliers. Property maintenance is not a problem and in a small area like this, the tenants will be well vetted for suitability and almost certainly with a proven 'track record' and good references.
    Thanks again and if you've any additional advice or guidance on how to achieve what my wife and I would like to do, please feel free to point us in the right direction.
    Regards
    Rob
    • glosoli
    • By glosoli 11th Mar 17, 12:41 AM
    • 630 Posts
    • 362 Thanks
    glosoli
    • #4
    • 11th Mar 17, 12:41 AM
    • #4
    • 11th Mar 17, 12:41 AM
    Just a quick question on the back of that,

    Are you paid in GBP or foreign currency?
    • Gin and Milk
    • By Gin and Milk 11th Mar 17, 11:35 AM
    • 216 Posts
    • 246 Thanks
    Gin and Milk
    • #5
    • 11th Mar 17, 11:35 AM
    • #5
    • 11th Mar 17, 11:35 AM
    As someone whose tenants have just given notice I'm tempted to say don't do it, that said no two circumstances are the same.
    There are other things you need to consider too - would you be letting through an agent? If so you need to consider their costs and what you'll get. A couple of friends of mine wanted to let theirs out through an agent. Rent was £500, but after fees they would have got £380. If you want to cut out a letting agent do you have reliable tradesmen you can contact in an emergency and do you think you could cope with getting a phone call on Saturday night to say there's water coming through the ceiling? Landlord's insurance isn't all it's cracked up to be either. Directline say they have a 24/7 service, but they don't and it can be nigh on impossible to get cover for people on DSS as they're considered to risky. If you can get a policy you'll pay a lot for it and for little cover.
    If you can deal with the above, have plenty of savings to cover you for emergencies, accept the fact that your tenants probably won't look after the house as much as you'd like them to, then yes think about doing it. Most tenants have never had a mortgage and I honestly believe they'd have an almighty shock if they did because they'd have no landlord to contact and have to sort any problems out themselves.
    And I would STRONGLY advise against letting your property to family or friends too.

    Good luck!
Welcome to our new Forum!

Our aim is to save you money quickly and easily. We hope you like it!

Forum Team Contact us

Live Stats

344Posts Today

4,370Users online

Martin's Twitter
  • Shana tova umetuka - a sweet Jewish New Year to all celebrating. I won't be online the rest of t'week, as I take the time to be with family

  • Dear Steve. Please note doing a poll to ask people's opinion does not in itself imply an opinion! https://t.co/UGvWlMURxy

  • Luciana is on the advisory board of @mmhpi (we have MPs from most parties) https://t.co/n99NAxGAAQ

  • Follow Martin