Mortgage/BTL Advice Required Please

redspiral1234 · 4 June 2009 at 1:27PM

Hi All,

First time post.

OK So I'm 24 years old and live in a 1 bedroom spacious flat that has a new bathroom kitchen bedroom and garden. I have a mortgage of 99,990 and the property was recently valued at around 110,000.

Myself and my girlfriend are looking to buy a place together in the not so distance future and I have always been drawn to the idea of letting my flat out; and getting a joint mortgage between us on the next place. (have 10k saved so far for deposit).

Oh also the mortgage I currently have is 40years term but I make 110 a month overpayment to make it 25years.

A few questions.

1.) Does anyone know whether me having the property will seriously change the amount we can borrow together?
2.) Am I able to keep the residential mortgage on the flat if family or friend is renting it. (consent to let)?
3.) Would I be able to keep my term of 40 years on a BTL

any kind of info would be great

SarBear1980 · 4 June 2009 at 2:14PM

Hi RedSpiral,

I have two properties that I rent out and I've found that it depends a lot on who your lender is.

Most lenders will require you to have a buy-to-let mortgage which generally requires a 75% LTV as minimum (that was even before the credit crunch) and have much higher rates than normal mortgages. However, some (like the Nationwide) will give you a period of 3 years in which you can rent it out but retain your normal mortgage but you have to apply to ask for permission. After the 3 years, they will then ask you to get a buy-to-let mortgage but not from Nationwide as they don't do them.

If you have a property that you rent out and you want to purchase another, most lenders will look at whether you can cover your mortgage with your rental income. Some will increase your liability by 25% to cover repairs etc and then work out whether you will have an income or a liability from your rental property. If you have a liability, they will take this into account when calculating how much you can borrow for your own property. If you have an income, they will also take this into account. Hurrah!

I'm not sure about your 40 year term but as long as you don't intend to retire before 65 then you should be ok.

Not sure if that's helped any. It's really worth researching because it really does depend which lender you use...Good luck!

redspiral1234 · 4 June 2009 at 2:39PM

Thanks Sarbear,

I just dont want to miss out as the property is in a great location and I dont want to be kicking myself if they shoot up in the next 10 years :S

I will have to speak to a FA or something; our joint income would be around 60K socould cover any loses.

How hard is it to managed your properties? Thinking of doing it myself!

Thanks for the insight

a very new home owner...

SarBear1980 · 5 June 2009 at 1:26PM

I have one that is rented through a reputable agency, I pay 8% commission and they deal with the advertising, credit checks, gas and electricity checks and visits. They don't do much besides that though, they don't guarantee my rent, you have to get separate insurance for that but my other half is a copper so that's my insurance - haha!!

The other is rented to a friend of my mum's. She's rented for the last 15 years so there's no chance of her moving for the forseeable future.

I do my own tax returns because I'm an accountant so in all, it's not too bad. I'd just suggest you don't advertise a rental property with white goods as if anything happens, you have to replace immediately. I had to buy a washing machine for the flat I rent out on Xmas Eve, that wasn't fun. They're washing machine is newer and better than mine!! haha!!