Remortgaging and letting a house that you currently live in?

QTPie

What if you have been living in the house for 5 years... if we can't sell (looking that way) am considering renting it out instead. I would also look at remortgaging through another lender...

We currently have 75% (or more) equity. Might look to draw down on that - either at the time of remortgage or later.

Better (or even possible) to either:
- remortgage as a residential mortgage (may well stay there another 6/9/12 months anyway) with the current level of equity.
- remortgage as a residential mortgage (may well stay there another 6/9/12 months anyway) with the reduced level of equity (possibly down to 30%)
- remortgage as a BTL mortgage (and move out now?) with the reduced level of equity (possibly down to 30%). I am assuming that it wouldn't be a good idea to BTL mortgage and then try to reduce equity...

Thanks
QT

puddy

residential mortgage rates are cheaper and tey normally let you rent out for about a year i think

ps - what are you getting the equity out for,, another property? if so, and its cos you want to move, sounds ok to me,,,,, if its for general spends, i wouldnt cos of the price of your property dropping so you wont be left with 30% equity, more like 10% in a couple of years

silvercar

If you let your property on your current mortgage you are in breach of your mortgage conditions. Not a good idea as post will arrive at your house and the tenants could open it! (Even with re-directed mail, some slips through the net.) That said, it is a civil matter (in legal terms) between you and your lender. If they found out, they could increase your interest rate, they could tell you to transfer to a BTL product, they could just give you consent to let without charging you. If you ask in advance they may agree or they may say no or they may transfer you to a BTL product. (though unlikely with a low LTV). Should you be repossessed while the property is tenanted, your tenants could get less notice than they would if you had the correct mortgage.

If you change to a different lender with the firm intention of letting the property or with tenants already in place, you have to go for a BTL mortgage. To apply for a residential mortgage with no intention of living in the property is mortgage fraud, deception.

QTPie

Yes, equity release to buy another property. We want to move, but are having problems "selling in the same market that we want to buy": I am happy to accept that our house may be worth "2004 prices", but the vendors of the houses that we are interested in are still demanding "late 2007 prices and then some".

It is looking too risky for us to sell now (with so much market disaprity), so one option is to let our current house, rent for a while, maybe buy, probably hang on to the current house until prices rise again... IF I can make that work...

QT

puddy

yes i read your story, same thing with me really except that i hope im not going to be gazundered as she has promised not to! i have accepted a low price, probably as you say 2004 prices and none of the properties that im looking at have budged their prices,,,,so frustrating

QTPie

Thanks, so it is basically "work out what we are doing and be honest with the mortgage lender" - the honesty bit is fine with me, deciding what to do is harder... I certainly wouldn't want to hide it or deceive :A

If we decide not to sell now, then I would want to remortgage the property ASAP (current lender pretty rubbish). However we may not want to rent the property out for 6/9/12 months...

QT

silvercar wrote: »

If you let your property on your current mortgage you are in breach of your mortgage conditions. Not a good idea as post will arrive at your house and the tenants could open it! (Even with re-directed mail, some slips through the net.) That said, it is a civil matter (in legal terms) between you and your lender. If they found out, they could increase your interest rate, they could tell you to transfer to a BTL product, they could just give you consent to let without charging you. If you ask in advance they may agree or they may say no or they may transfer you to a BTL product. (though unlikely with a low LTV). Should you be repossessed while the property is tenanted, your tenants could get less notice than they would if you had the correct mortgage.

If you change to a different lender with the firm intention of letting the property or with tenants already in place, you have to go for a BTL mortgage. To apply for a residential mortgage with no intention of living in the property is mortgage fraud, deception.

QTPie

jenner wrote: »

yes i read your story, same thing with me really except that i hope im not going to be gazundered as she has promised not to! i have accepted a low price, probably as you say 2004 prices and none of the properties that im looking at have budged their prices,,,,so frustrating

Glad that I am not the only one, but sorry that you are suffering too...

We need less disparity in the housing market - a falling market is just dandy for moving up the property ladder, but the rungs are disproportionately space at the moment...

QT

socrates

I think you need to release the funds NOW. I advise an off set type arrangement (NOT First Direct - they are not that as flexible for the second part of your plan which is to rent out)

As you have an offset you will not make any interest payments until you actually use the funds. This way you sit on them until you decide to move. At that point you tell the lender you are intending to move and want to have Consent to Let.

I think you will have to go to another lender for the second mortgage, but as long as the rent to mortgage equation stacks up. You will probably have a large deposit so getting the other mortgage will be quite simple.

Trying to release funds, say you are going to rent out and buy another property all at the same time - will be quite tricky I would imagine.

QTPie

socrates wrote: »

I think you need to release the funds NOW. I advise an off set type arrangement (NOT First Direct - they are not that as flexible for the second part of your plan which is to rent out)

As you have an offset you will not make any interest payments until you actually use the funds. This way you sit on them until you decide to move. At that point you tell the lender you are intending to move and want to have Consent to Let.

I think you will have to go to another lender for the second mortgage, but as long as the rent to mortgage equation stacks up. You will probably have a large deposit so getting the other mortgage will be quite simple.

Trying to release funds, say you are going to rent out and buy another property all at the same time - will be quite tricky I would imagine.

Thank you - will have a think about all of this. We currently have an offset mortgage, but it is pants... (IF)

Rent to mortgage and income can all stack up... repayments COULD be painful (if we held onto it and tried to buy again): just depends what happens to the property market... IF things completely collapse, then we should to able to buy a second property comfortably. IF things stabilise, instead, (and houses we want to buy come into line with what we want to sell) then maybe we can look again at selling before buying.

QT