Changing a lease mortgage - a pipe dream?

lani53

Hi, I move a lot with my job, so I don't live in my house anymore. I've just realised that a one off consent to lease fee is actually charged every 6 months, and has been raised recently meaning a whopping £1500 extra on the mortgage every year, ouch!

As the off-setting and higher interest rate really isn't doing it for us, this last straw means we want to remortage. It is currently in mine and my partners name, and we want to remortage just in my name to allow us to buy another property in his name at some point in the future. Is remortgaging/changing the names a foolish (or expensive) aspiration? There is no release fee due. Your advice appreciated

silvercar

See what rate you can get elsewhere.

I don't see the point of separating the properties into individual names. If the property is let from the outset you need a BTL mortgage, so you may as well put it in both names.

The downside is that needing a BTL mortgage, you could find the max LTV will be low, possibly no more than 75%.

lani53

thanks for the advice! On the names for BTL - we had thought about helping my brother out by buying half a house with him, (future) and because we would not be living in that one either we've been advised that separating the house and half house between my partner and I would make sense for tax purposes?

Conrad

Yes unless you intent to move back in, it will be treated as buy to let. The set up fees can be high. Note the rent must well cover an interest only payment at a rate predetermined by the lender. Note evidence of minimum personal income is required by most lenders.

If you try and do it on a residential basis, your insurance will be invalid and in any event if you move around a lot your score might be a bit low.

Make sure your current insurance is ona valid buy to let policy. A lot people over look this.

lani53

Yes, the insurance and stuff is all sorted out, we did everything properly, but didn't realise we would be charged £1500 a year by the mortgage company to rent it out. This does seem excessively high - or is it just standard?

I think with the house prices falling we are probably at the same level as when we started (85%) over 2 years ago, so remortgaging with a BTL may not be possible at present without putting our savings into this mortgage rather than one for my brother's house.

lani53

Oh, and I forgot - our rent covers nearly all of the mortgage repayments at present (interest and repayment), and we have secure income - the joy of stable long term contracts. Would we (or one of us) be considered, do you think?

Conrad

No, B2L is now at 75% max and in any event at 85% the rent won't be high enough to meet lender rules.

I suspect the fee is so high to make up for the fact you only pay a residential rate even though it's let out and should be charged at a higher buy to let rate. Does seem excessive though.

All round it doesn't seem like a viable investment what with those massive annual charges. Better off just selling perhaps.

lani53

Problem with selling is we will be in exactly the same position - searching for a BTL mortgage on another house. I think I'll need to see if we can get a BTL at 75 % (and invest the money we have into our house rather than try to assist the family...he'll have to stay renting for a while longer). What sort of rates are available on that (apologies, I have done a little hunting but most say to call them for a BTL rate)?