Does it have to be a BTL mortgage?

wiginer

Hi, we have a house and its valued at £180,000, the mortgage is £45,000 with about 8/9 yrs left on it paying about £550 pm.

We are thinking of using the capital in the house via a re-mortgage to buy a cheaper house to live in and rent out our current house as this would probably generate more income.

So, I guess what I'm saying is will the banks do this? or will it have to be a BTL?. Or is there a better way?

p.s. not looking at using all the asset we have in the property, probably about 80%.

thanks for looking....

Baz

david29dpo

Ask your lender. Some let you rent out (for a fee) or you may have to change mortgage products. You may have problems getting 80% these days, certainly on a BTL.

Mrsmoneypenny

If you are getting a mortgage from part of the equity in your present house, then renting out the existing house I would be surprised if you didnt have to take out a BTL because that is exactly what you appear to be doing. Then your insurance will have to reflect it too.

We recently bought a house to rent out only need a 5% mortgage and would be paying that off very quickly, we had no choice but to go with the BTL, i did ring round and was told it had to be a BTL, that was almost a year ago, so things could have changed. We went with RBS bc you could overpay, no early redemption fees and luckily they have been very quick to reduce their interest rates.

wiginer

Hi, thanks for the replies but I dont think I explained myself properly, probably because I know very little about mortgages, or maybe I did and your replies were spot on...but here goes again

Value of present property £180,000, mortgage £45,000 = equity of £135,000

Looking to borrow via re-mortgage 80%max (probably could get away with 65% and add funds we have tucked away) of equity = £108,000.

Look to buy a property for £108,000 or lower and buy it out right, no mortgage. Live in that property thus just having the one mortgage.

Dont suppose its that simple though?

abouttimetoo

wiginer wrote: »

Value of present property £180,000, mortgage £45,000 = equity of £135,000

Looking to borrow via re-mortgage 80%max (probably could get away with 65% and add funds we have tucked away) of equity = £108,000.

Hi Mrs MP

I think david29dpo had already read into your post that you wanted to release all of the equity (as you say above 80%) and the is right in that this is a tough amount to get on a BTL these days.

I'm no expert but as far as I know you have to change your mortgage to a BTL (although you do hear of some people who's mortgage providers seem happy for them to rent out as long as they know about it).

My lender charged me a £125 for seeking buy to let permission (a necessary bit of paperwork) and a £399 arrangement fee to convert to BTL. The other thing I had to satisfy was that the monthly rental income would be a minimum of 125% of the mortgage payment - this is in our own interest to try and account for any empty periods you may have during the year.

Lots of other stuff for you to think of in terms of Landlord insurance but I'm sure you know you've got lots of research to do before you go down the BTL route.

socrates

This is a similar post to many on here at the moment.

When you are asking for additional borrowing the lender will ask you what it is for - if you say its for the purchase of another property to live in and let the one out you are living in and the mortgage is on you have very very little chance, in the present climate - they are going through any mortgage application with a fine tooth comb after all they are not exactly busy.

If you come up with a story for the money - eg improvements etc. you are effectively lying - which is in turn mortgage fraud.

I think the best advice is to wait for one of the many Mortgage Advisers on here answer this one.

Personally I would not do it but I know people who have but that was in a completely different market.