Can I let WITHOUT a buy to let mortgage

myk3

Hi all,
I am looking to get on the property ladder and have saved up a nice deposit and I estimate sometime before Christmas I will be looking to buy a place to get started on my journey.
I’ll be looking for a 2 bedroom house which that I will feel happy to live in until I decide the need to move again.
For the next 2 to 3 years or so there won’t be much need for me to move out but with the prices of houses at the moment I feel it will be a good investment to get on now rather than later. What I want to do is buy a place and rent it out which I hope to cover my mortgage and fees etc.
In the mean time I can save more money over the years I am not living in it to pay off a larger chunk of the mortgage to give me more breathing room come the time I want to move in. If the house was ever unmanned I would pay all the bills and mortgage and may live in until a new tenant is found.
My questions are:
Do I have to have buy to let mortgage?
What is the advantage of a buy to let?
Thanks!
Myk3

poppy_f1

if your planning to let the house then you need a buy to let mortgage

SelbyJay_2

Officially, you need a BTL mortgage

MrsTinks

Yes you need a buy to let mortgage...

This article might be of interest

_Andy_

The OP needs to clarify whether they are wanting to rent out straight away or not, the first post is ambiguous.

JasX

myk3 wrote: »

My questions are:
Do I have to have buy to let mortgage?

Officially, yes you must make a full declaration of your circumstances to the bank on your application and they''ll advise you which type of mortgage they're prepared to offer and at what rate

myk3 wrote: »

What is the advantage of a buy to let?

People taking out buy to let mortgages are generally percieved as higher repayment/default risks so are offered mortgages with stricter lending criteria and higher interest rates to reflect the higher risk to the bank

myk3 wrote: »

My questions are:
Do I have to have buy to let mortgage?

Unofficially, you'd probably get away with it

myk3

thanks for the link mrsTine!

I would be looking to let out a month or 2 later or when i feel the house is in a fit state to be let out.

Like is said, if the house is ever unmanned I may live in it but of course ill always be able to pay the mortgage myself.

i would just like to know what is the main difference in a normal mortgage and a buy to let.

and if a buy to let has any additional mandatory requirements?

im a total newb to mortgages to an extent so any help will be appreciated!

JasX

Basically a buy to let mortgage gives you permission to let out the property but is more expensive, a residential mortgage requires 'owner occupation' and if your bank learned you were letting it out would regard this as 'naughty'.

The chances of being found out are generally regarded as low.

Even if caught the most likely sanction would be they move you over to a buy to let mortgage at that later date and charge you the higher BuyTo Let rate from then on.

In theory they could call the loan in which may force you to sell if you couldn't secure alternate finance but that would be somewhat extreme.

myk3

thanks JasX!

i do understand now. i am assuming for e.g. if i have a buy to let mortgage and I am living in it while i have no tennance i am permitted to do so.

i know that sounds pretty silly but just need to clear that up.

Im not sure how long ill have the property before i put it up for rent so its unfortunate that there isnt a legal way i can use a normal mortgage.

thanks

JasX

Its also legal to take a normal mortgage while you live in it and then start renting it out later provided you inform your mortgage provider in advance.

Being thorough you might:

1) Find out the rate+charges for a normal mortgage from your bank/independent mortgage broker (the latter probably being best to go thru)

2) Ask your broker should to decide to move out of the property towards the end of the mortgage term and rent it out what would happen if you did that and advised the bank/mortgage provider at that point (eg for 3 year fix/discount suggest after 2 years). Particularly what charges/fees etc might be involved (if any) and/or what would be involved in them moving you over to a BTL, or even would they need to do so at all? (you never know your broker might know some mortgages with Ts and Cs that allow limited renting out)

Then look at your position and consider when you're likely to want to rent it out (eg 6 months) and decide if its better value to take a normal (lower rate) mortgage initially and advise your mortgage provider later on when you start renting out (ie pay less initially but face possible fees at that point), or if it is actually cheaper just to take the BTL mortgage now

Bear in mind circumstances/plans may change and if it's not exceptionally more expensive the 'switch over when you actually start renting out' option would give you more flexability if you delayed renting it out for whatever reason (eg births/deaths/marriages/job/life events etc etc).