switch to BTL or not?

wilsonrp

Hi Guys,

Am new on here but have already had a snoop around and it seems you are a very passionate and helpful bunch. So I thought I would ask your advice.

I have a flat which i've rented out for some time to good tennants. Equity is approx 20% currently and I don't make any profit on the rental income over my residential mortgage.

I would like to purchase a house and have approx 10-15% deposit to put down. I don't want to sell my flat in the current market and my tennants don't want to leave either.

I have looked at BTL mortage deals but they look very expensive (4-5%)compared to my current mortgage (2.5%) and my rental income doesn't =120% of my mortgage payment as many providers stipulate to qualify.

My question is. Do I really need a BTL mortgage in order to apply for another residential mortgage? If I go with a different lender ultimately how will they know I have another residential mortgage unless I declare it? I am aware of various lenders warnings on foreclosure for failure to inform them etc but I am not convinced that this is ever enforced. Also I have heard that some lenders don't charge their products for existing customers that switch to BTL. Does anybody know which lenders?

Thanks for looking!

poppysarah

Your mortgage should be changed to BTL if it's longterm. Ask your bank for permission now.

carolt

wilsonrp wrote: »

Hi Guys,

Am new on here but have already had a snoop around and it seems you are a very passionate and helpful bunch. So I thought I would ask your advice.

I have a flat which i've rented out for some time to good tennants. Equity is approx 20% currently and I don't make any profit on the rental income over my residential mortgage.

I would like to purchase a house and have approx 10-15% deposit to put down. I don't want to sell my flat in the current market and my tennants don't want to leave either.

I have looked at BTL mortage deals but they look very expensive (4-5%)compared to my current mortgage (2.5%) and my rental income doesn't =120% of my mortgage payment as many providers stipulate to qualify.

My question is. Do I really need a BTL mortgage in order to apply for another residential mortgage? If I go with a different lender ultimately how will they know I have another residential mortgage unless I declare it? I am aware of various lenders warnings on foreclosure for failure to inform them etc but I am not convinced that this is ever enforced. Also I have heard that some lenders don't charge their products for existing customers that switch to BTL. Does anybody know which lenders?

Thanks for looking!

I think you'll find we're less compassionate and helpful when someone posts to say they're a landlord breaking the law and wants our advice.

You do realise that under existing arrangements, your tenants currently have no rights, don't you?

That they could be thrown out onto the streets more or less immediately if you got repossessed, as you are renting out property without informing your lender?

Selfish !!!!!!!.

wilsonrp

Whooa. Hang on there guys. I do not consider myself to be dishonest and devious, maybe just a little naive! I have posted on this forum because I am honest and want to do things properly but don't want to be financially screwed by my lender whom not so long ago would have offered me a BTL deal that would be seen very irresponsible in today's climate. So please forgive me if I don't exactly feel loyal to those that bear some responsibility
for the mess we find ourselves in. How short some of our memories are.....

I am certainly uncomfortable being accused of breaking the law. Could "Carolet" please elaborate on this point? Which law are you referring?

Browsing other landlord resource and even this site there are many other new inexperienced landlords currently in the same/similar position to me asking for advice. Whilst I accept that i shouldn't necessarily follow their example I don't think I should get a battering either.

In reply to Lodger I have a residential repayment mortgage currently. I was fixed on a joint mortgage with my ex-girlfriend. We split up and rented the flat out whilst we were sorting out the remortgage into my name. During this time I had to pay extra to top-up the rent to cover the mortgage payment. This has now been completed and my fixed rate has ended so I am free to remortgage without early repayment penalty. Hence my original post. I am trying to decide what the best course of action/mortgage products would be for me. I have always been in full time employment and this has been my only source of income so have never been anywhere near a self-assesment.

If I am reading this right my only options are;
-sell the flat and buy the house
-put extra cash into the flat to raise the equity and lower the mortgage payments so I can remortgage to BTL, start saving again for the house

If anyone has anything constructive to add to this I would appreciate your response.

Thanks

socrates

wilsonrp wrote: »

Whooa. Hang on there guys. I do not consider myself to be dishonest and devious, maybe just a little naive! I have posted on this forum because I am honest and want to do things properly but don't want to be financially screwed by my lender whom not so long ago would have offered me a BTL deal that would be seen very irresponsible in today's climate. So please forgive me if I don't exactly feel loyal to those that bear some responsibility
for the mess we find ourselves in. How short some of our memories are.....

I am certainly uncomfortable being accused of breaking the law. Could "Carolet" please elaborate on this point? Which law are you referring?

Browsing other landlord resource and even this site there are many other new inexperienced landlords currently in the same/similar position to me asking for advice. Whilst I accept that i shouldn't necessarily follow their example I don't think I should get a battering either.

In reply to Lodger I have a residential repayment mortgage currently. I was fixed on a joint mortgage with my ex-girlfriend. We split up and rented the flat out whilst we were sorting out the remortgage into my name. During this time I had to pay extra to top-up the rent to cover the mortgage payment. This has now been completed and my fixed rate has ended so I am free to remortgage without early repayment penalty. Hence my original post. I am trying to decide what the best course of action/mortgage products would be for me. I have always been in full time employment and this has been my only source of income so have never been anywhere near a self-assesment.

If I am reading this right my only options are;
-sell the flat and buy the house
-put extra cash into the flat to raise the equity and lower the mortgage payments so I can remortgage to BTL, start saving again for the house

If anyone has anything constructive to add to this I would appreciate your response.

Thanks

Look up consent to let - you are not buying anything to let - once you have read those threads all will become clear.

wilsonrp

Whooa. Hang on there guys. I do not consider myself to be dishonest and devious, maybe just a little naive! I have posted on this forum because I am honest and want to do things properly but don't want to be financially screwed by my lender whom not so long ago would have offered me a BTL deal that would be seen very irresponsible in today's climate. So please forgive me if I don't exactly feel loyal to those that bear some responsibility
for the mess we find ourselves in. How short some of our memories are.....

I am certainly uncomfortable being accused of breaking the law. Could "Carolet" please elaborate on this point? Which law are you referring?

Browsing other landlord resource and even this site there are many other new inexperienced landlords currently in the same/similar position to me asking for advice. Whilst I accept that i shouldn't necessarily follow their example I don't think I should get a battering either.

In reply to Lodger I have a residential repayment mortgage currently. I was fixed on a joint mortgage with my ex-girlfriend. We split up and rented the flat out whilst we were sorting out the remortgage into my name. During this time I had to pay extra to top-up the rent to cover the mortgage payment. This has now been completed and my fixed rate has ended so I am free to remortgage without early repayment penalty. Hence my original post. I am trying to decide what the best course of action/mortgage products would be for me. I have always been in full time employment and this has been my only source of income so have never been anywhere near a self-assesment.

If I am reading this right my only options are;
-sell the flat and buy the house
-put extra cash into the flat to raise the equity and lower the mortgage payments so I can remortgage to BTL, start saving again for the house

If anyone has anything constructive to add to this I would appreciate your response.

Thanks

m_13

wilsonrp wrote: »

We split up and rented the flat out whilst we were sorting out the remortgage into my name.

I have always been in full time employment and this has been my only source of income so have never been anywhere near a self-assesment.

Income received from property is still income unfortunately so your full time employment has not been your only source of income from the first day you received rent.

There are allowances against property income. Mortgage interest in most cases, costs of letting (gas certificates, electrical certificates, letting agents fees) and some legal fees. However the remainder is taxable at your highest rate of income tax. You may also be liable for fines for undeclared income from previous years.

You may feel people are being harsh and judgemental. However I feel you have gone into this with your eyes closed, perhaps because you are naive, and unsurprisingly there is going to be a price to pay.

wilsonrp

m_13 income point taken, that makes sense thinking about it. Suppose it just feels wrong when you don't actually see any of the money!

Presumably that means my ex will also be liable. Jees this is gonna be fun to sort out:(

Thanks

theartfullodger

Yup, ex is liable - IIRC HMRC can decide how the income should be split if what you decide doesn't appear "right".. you & her might wanna agree an equable split & handling of all expenses and then present a united, common, position to HMRC.

If you tell HMRC first & explain you've only just (assuming that is true..) realised you should both be declaring etc. etc. and will shortly give them all the numbers then they might not be so upset.

If they find out (people talk, neighbours, ex-partners, disgruntled tenants, busybodies ,...) then HMRC may not be "pleased".

Best wishes & good luck in the property renting game: One word of advice: It ain't a game, it is a job - handle it in a professional manner as I am sure you do your other income and that should be good. Handle it as an amateur and you'll likely come unstuck ...

Cheers!

Lodger