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    • HollyBell
    • By HollyBell 12th Jul 17, 9:45 AM
    • 2Posts
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    HollyBell
    Switching current mortgage to a letting mortgage to work abroad (Help to buy equity l
    • #1
    • 12th Jul 17, 9:45 AM
    Switching current mortgage to a letting mortgage to work abroad (Help to buy equity l 12th Jul 17 at 9:45 AM
    We are looking to move to Canada for a year to work and possibly travel for a bit afterwards.

    At the time of buying we owed £112,000 of an equity loan. When we took out the initial mortgage we was earning a lot less and now are planning to add the entire loan to a mortgage so that we own the whole thing.

    Am I right in thinking we can remortgage at the end of our two year fixed rate mortgage and add what ever the worth of the 40% is currently (permitting we earn enough to cover that amount)?

    If that is the case, how hard would it be to then convert this to a letting mortgage, will the banks allow us to do this?

    We would want to work in Canada for about a year and would more than likely rent whilst there.

    Does this plan sound viable or are we dreaming?

    Thanks for any help in advance!!
Page 1
    • DumbMuscle
    • By DumbMuscle 12th Jul 17, 10:45 AM
    • 196 Posts
    • 290 Thanks
    DumbMuscle
    • #2
    • 12th Jul 17, 10:45 AM
    • #2
    • 12th Jul 17, 10:45 AM
    So, just to clarify:

    You currently have a property, which you paid for with:
    - a 40% equity loan
    - a mortgage (what %?)
    - a deposit

    You wish to remortgage so that you can 1) pay off the equity loan, and 2) get a mortgage which will allow you to rent the property out for a year (either via consent to let, or converting to a BTL)

    1) is doable providing your income/credit can support such a mortgage - which will depend on the current value of the 40% equity, and how much is left on your current mortgage. Do you have jobs lined up in Canada? If you do not have secure income for that year, then you're unlikely to be able to remortgage to a higher level.

    Whether the banks will allow you to convert to a BTL mortgage will depend on the LTV of the new mortgage and on the expected rental income. We would need more details of the numbers involved to be able to judge how likely this is (e.g. value of the house, what is left on the current mortgage, and your incomes)

    Make sure you know the rights and duties you will have as a landlord, and have a plan to administer those while in Canada and travelling. And bear in mind that if your tenant does not want to leave when you return to the UK, it will take a significant amount of time to get them out. Also bear in mind that you might not find a tenant in reasonable time - and ensure you can afford this if it happens.
    • kingstreet
    • By kingstreet 12th Jul 17, 10:59 AM
    • 31,754 Posts
    • 16,969 Thanks
    kingstreet
    • #3
    • 12th Jul 17, 10:59 AM
    • #3
    • 12th Jul 17, 10:59 AM
    If you remortgage on a residential basis, you may get upto 90% of the value of the property. However, you will not get consent to let immediately.

    If you remortgage to a BTL, you will get upto 75 - 80% of the property value.

    The above subject to property value, rental income estimate and personal affordability.
    I am a mortgage broker. You should note that this site doesn't check my status as a Mortgage Adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice. Please do not send PMs asking for one-to-one-advice, or representation.
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