Mission Impposible? Resindential to Buy to let Options

Kidders

I have found my presonal cirmcumstances have changed and they probably couldn't have come at a better time - not!

I recently remortgaged my property at 85% LTV. Feeling sufficiently stung with the 6.14 2 year fixed rate i got, but it is what it is

The key problem i have is that i am now moving, and my options seem pretty limited. I will be renting when i move, but the key thing is what to do with the current property i own

Scenrio 1 - i sell the property now and take the hit - this is not what i want to do for obvious resons - the current housing market. I still owe a deposit to generous parents and by selling now i would barely be able to cover that, let alone make any money towards a deposit on my next property

Scenario 2 - mortgage company has confirmed i am able to let my property on a short term let (1 year). Although not had it confirmed in writing yet, i have been advised that it will be a case of filling out a form which i have recieved once i've had the mortgage for 6 months, and i shouldn't have any problem with approval. Rates etc would stay the same. My rent would be short of the mortgage by 200-250 all in but for personal happiness i'm willing to suck up those costs. However - would i be able to switch to a better rate and still be able to let short term or am i taking the michael?

Scenario 3- and this is where i'm not sure!! Can i try and remortgage on a buy to let - take the hit of early redemption charges on my existing mortgage and somehow raise the funds that i need? No where is doing 85% Buy to let mortgages anymore...the 10% i would fall short where coudl i get that from? A bank loan i guess. Any ideas?? Would this be more financially sound and viable than scenario 2?

Scenario 4 - go with scenario 2 and re - evaluate in a years time...

My brain hurts!

barnaby-bear

Kidders wrote: »

I have found my presonal cirmcumstances have changed and they probably couldn't have come at a better time - not!

I recently remortgaged my property at 85% LTV. Feeling sufficiently stung with the 6.14 2 year fixed rate i got, but it is what it is

The key problem i have is that i am now moving, and my options seem pretty limited. I will be renting when i move, but the key thing is what to do with the current property i own

Scenrio 1 - i sell the property now and take the hit - this is not what i want to do for obvious resons - the current housing market. I still owe a deposit to generous parents and by selling now i would barely be able to cover that, let alone make any money towards a deposit on my next property

Scenario 2 - mortgage company has confirmed i am able to let my property on a short term let (1 year). Although not had it confirmed in writing yet, i have been advised that it will be a case of filling out a form which i have recieved once i've had the mortgage for 6 months, and i shouldn't have any problem with approval. Rates etc would stay the same. My rent would be short of the mortgage by 200-250 all in but for personal happiness i'm willing to suck up those costs. However - would i be able to switch to a better rate and still be able to let short term or am i taking the michael?

Scenario 3- and this is where i'm not sure!! Can i try and remortgage on a buy to let - take the hit of early redemption charges on my existing mortgage and somehow raise the funds that i need? No where is doing 85% Buy to let mortgages anymore...the 10% i would fall short where coudl i get that from? A bank loan i guess. Any ideas?? Would this be more financially sound and viable than scenario 2?

Scenario 4 - go with scenario 2 and re - evaluate in a years time...

My brain hurts!

Rent somewhere during the week and return as an when at the weekends to your old home, the spare rooms in which you rent out to a couple of lodgers.... lodgers think it's great as they have mostly absent LL - they are less liekly to be difficult about leaving after only a short let, you have flexibility to reclaim the house very fast (lodgers have much fewer rights) as circumstances change, it's still your residential home so you tax free rent (upto a fairly generous limit), few onorous regulations, not messing around with ASTs etc - can check up on lodgers .... just check them out well

SavingSteve

2 - every day of the week.

The fact that they are willing to switch you to BTL with no change in terms is a god send.

QTPie

SavingSteve wrote: »

2 - every day of the week.

The fact that they are willing to switch you to BTL with no change in terms is a god send.

I agree - if you can get that permission from your lender.

I have recently been looking to do the same (but my lender wouldn't easily allow me to rent it out... well they would, but with high charges and wouldn't let me draw down more equity). So I was looking at BTL mortgages: this pretty much all require 25% equity in the property AND have hefty charges...

Good luck
QT

mlz1413

is your move permanent? if so could you try and sell yours cheaply (by that I mean to achieve a sale) and then buy where you are going to, so you port the mortgage to new property and hopefully can then ride out the fixed term.

If this is possible it means your monthly mortgage stays the same and no redemption costs are incurred.

Kidders

Thanks all for the advice

The more i read the threads on this site i realise how lucky i am to be able to let the property with no change to my terms. Although originally they told me after 3 months of being on the mortgage i could let, they then "changed the rules" to being 6 months. I am hoping they will not do that again!

Just to be clear though, i have been given the "ok" to let the property and keep my mortgage as residential on the basis it will be for one year and "due to personal changes or financial reasons" which mean i don't want to sell straight away.

Not sure what your situation is QT, but maybe this is something you could approach your lender about as a short term thing

Although it is a permanent move i am in no position at the moment (not enough deposit or value on property) to be able to buy straight away. There is a large difference in propertry prices too, not in my favour. Currently flat valued at £130k where i'm looking to move same type of property is £250k!

My thinking is to save save save for a year, and as we all are, hope that in a years time things will have picked themselves up. If nothing else the repdemption charge would have reduced if i have to sell at that point

Just wish i hadn't taken that fixed mortgage! But hey!

ScouseIrish

We have the same situation. We are buying and my girlfriend's house is for sale but not much is happening. Our bank is letting us get a new mortgage on the house we want and allowing us to rent hers. They aren't turning it into a letting mortgage but are using a 'consent to lease' agreement to let us do it. Terms of mortgage or interest rates aren't affected. There are a few conditions attached such as the rent must be more than the mortgage payments - we're having to change it onto interest only repayments to facilitate this but it may help you knowing that this option is available (in my bank anyway - Halifax). The 'consent to lease' will last for 3 years...

Kidders

Actually that's quite useful...if i can change to interest only for the year that would mean more moeny saved, thanks, wish mine was for 3 years, i nearly went with halifax too!