Mortgage advice - buy to rent or residential?

ollyfarrow

I’m currently living with parents. My dad is lending me 100k as a deposit so my girlfriend and I can buy our first property. We are getting married next summer and are currently saving for that huge expense.


We want to buy a 200k property using my dads 100k as a 50% deposit. His name wont be on the deeds but we will have a solicitor write up that he will be owed 50% of the equity if and when we sell the property.


We want to buy this house soon and then rent it out for a year. That way we will be buying a house while the prices and interest rates are low (relatively speaking). It will also enable us to save up for our wedding for another year but still have a house to move into once we are married.


I know that having such a large deposit will enable us to get the best mortgage deals. But because we are going to rent it out for year do we need a buy to let mortgage? If so, what happens after the year when we move in.


Can we get around this somehow?


Help please!!!

dimbo61

Cant speak about the BTL mortgage but you could take out an offset mortgage with Yorkshire Building Society and DAD could then pay the £100k into an offset account in his name ( offset plus )
This could be used to offset half the mortgage cost each month and as its in his name you and your OH would have no legal claim to it.
Have a smaller party ( wedding ) and save for the deposit on the house
A BTL property and your dream home to bring up kids are two very different houses .
Having a BTL property has TAX implications , landlord responsibilities, Capital gains tax etc.
Buy a house that needs some work doing on it and make it your home not an investment.

jamtart6

although you have a very big deposit, (50%), the best rates are usually when you have 60%....

betmunch

at Dimbo61 - What? I dont know Yorkshire Bank personally but I am sure they wont do 100% offset mortgages. I think your creating an issue where there isnt one. Let the solicitor do their job and sort out the contract over the equity share.

at Jamtart6 - No they are not. 50% deposit gets you the best deals around.I hope to god your not regulated!

koexelek

Ideally, you want a one year buy to let with no extended tie in, but virtually no chance of getting one of those.

it's a good proposition for a lender, so probably the best thing to do would be to be honest about your intentions. They may let you take it on a residential mortgage, load the rate for a year while you are letting it out, then reduce it again when you move in.
That might be a bit of a long shot though, but worth asking.

Technically, if you aren't going to live in it yourself initially, it has to be on a buy to let mortgage, otherwise lenders will view it as a fraudulent transaction.

Robert_Sterling_3

I’m currently living with parents.

My dad is lending me 100k as a deposit so my girlfriend and I can buy our first property.

[ The property might lose value during the course of the year. Other people are delaying buying property for the time being. You will be swimming against the tide. ]

We are getting married next summer and are currently saving for that huge expense.

[ It does not have to be a huge expense. ]

We want to buy a 200k property using my dads 100k as a 50% deposit. His name wont be on the deeds but we will have a solicitor write up that he will be owed 50% of the equity if and when we sell the property.

[If the amount you owe him will be half the equity in the house when it is sold then there will be tax to be paid on his gain, if any, I think. ]

I know that having such a large deposit will enable us to get the best mortgage deals. But because we are going to rent it out for year do we need a buy to let mortgage?

[ I think that as you will be "Buying to Let" you would need a "Buy to Let Mortgage". ]

[ You might be able to by lying to the lender. Ask your solicitor if he/she thinks this would be a good idea. ]

betmunch

at Robert_Sterling - !!!!!!?????? "you might be able to by lying to the lender" You shouldnt even suggest this sarcasticly. If the OP doesnt spot the sarcasm and his solicitor is desperate for business then he could be in a world of trouble.

Cant we all just send the OP to a local Mortgage Broker? I believe I know of a lender that will allow him to take this on a resi, WITHOUT LYING! But as hes not my client I wont be doing the research to confirm my thoughts. I wont say who it is either as that could be seen to be advising.

feisty1

[quote=betmunch;18505249]at Robert_Sterling - !!!!!!?????? "you might be able to by lying to the lender" You shouldnt even suggest this sarcasticly. If the OP doesnt spot the sarcasm and his solicitor is desperate for business then he could be in a world of trouble. Cant we all just send the OP to a local Mortgage Broker? I believe I know of a lender that will allow him to take this on a resi, WITHOUT LYING! But as hes not my client I wont be doing the research to confirm my thoughts. I wont say who it is either as that could be seen to be advising.[/quote]


betmunch;18505249: You will find the majority of posts by RS are all "tongue in cheek" replies & if u even suggest someone "contact an adviser" for help..........RS will then post they have come to MSE for advice not advisors!!........I have already made RS aware it is opinion which is posted on here (not advice) and many cases which are not straight forward require the assistance of an adviser to truly help the individual, but RS has some bee in their bonnet regarding advisers.........

betmunch

at Feisty1 - Thanks for the heads up there, as you can see I am new to this forum so dont know everyones "thing". I didnt intend to use this forum really and only signed up for the matchbetting.
I got tempted in through professional interest and I was shocked at some of the things people were saying! So now I find myself drawn into correcting unregulated people!
Glad I am busy this afternoon or I could see myself wasting all day here!!!!

Cheers