Changing a 100% Mortgage to Buy to Let due to relocation

Travelqueen

Hi

Have a few questions to see if anyone can help me.

Bought a home in July 2004 with my cousin who has since moved to Hong Kong for work (in Sept 05). We got a 102% mortgage (2% to pay fees etc) on an interest only basis using my dad as guarantor for part of the mortgage.

At the time I was a contractor earning 5K less than now and no bonus, and my cousin was earning 3K less than currently. Having put our new salaries into mortgage comparison websites it would seem possible to get a mortgage now without my dads assistance.

I am just about to go for a 2nd interview for a job in Leeds (I currently live in London) and would be on a good salary. From initial tentative enquiries I would be able to get another mortgage in my name to buy a house there, on the understanding my current shared property would be on a Buy To Let.

I asked my current lender about changing to a Buy To Let in September 05 when my cousin moved to HK as I was interviewing at the time for another overseas position, I was told by Scottish Widows that it shouldn't be a problem, but didn't persue for details.

Having spoken to them today however I was a little surprised to discover that the maximum LTV they could offer would be 75%, which would entail me paying them approximately 50K to do, not possible! Other lenders in the market can do LTV of 85% but to change to another lender I would be hit with a £6K fee.

I bought the property for 212,950. A similar property down the street sold for £230,000 in september 05 (and oct 04) which would seem to be a good indicator of current value, although possibly slightly higher as we have done some work on our property. This would mean that I have equity of approx 7.5% all things being equal.

The question is, does anyone have any idea of any lenders who could help me.

What I need to do is change my current shared mortgage into a BTL and purchase another property in Leeds.

The problem is, I can't move to Leeds without changing my property to a BTL as I would be breaking the terms of my mortgage agreement. I don't really what the outcome of this would be, but it probably wouldn't be good! This means I basically can't escape my current job which is a depressing prospect..

Also, does anyone know anything about tax etc as I want to make sure I pay everything I should

Sorry for the rambling problem, please help!

TQ

meanmachine_2

And others on here wonder why I KEEP banging on about the value of a deposit.

I'm afraid you shouldn't have taken on a 102% mortgage in the first place.

Had you and your friend saved up the 10% which is the absolute minimum if you ask me, you'd now have 15% equity in your place and you could get that job.

I'm sorry, but I don't think any lender in the land would BTL on a 92% LTV, but the brokers on here might know something to help you out.

MortgageMamma

I dont know of one that will BTL to over 90% ltv, but i dont mind having a look at your situation for you tommorow when i return to the office. There could be another way round this.

Travelqueen

Thanks to both the replies

I have now done some more investigation and things don't look as bad as they did yesterday

I can get an agreement to let for 12months which means I could take the job even if I can't do anything else.

Also, have had the house valued by an estate agent in the area and to my surprise they think that £250K would be achieveable (giving me 15% equity in the property). I personally think this is probably overvalued, but at least it's a start.

Also, I think that in July the fee for moving my mortgage will come down again (as we will have paid for 2 years out of the 5 years fixed mortgage) so that if at that point I wanted to move to an 85%LTV BTL mortgage it wouldn't cost too much.

I appreciate Mean Machines point about deposits, but to be honest it would have taken me at least 2 years to save 10K, assuming my cousin could have also saved the same, by which point the market would have moved even more. 100% mortgages are there for a reason, to give people who would otherwise never get a foot on the property ladder (my 28year old sister still living at home on ridiculously low wages unable to go anywhere) a leg up. You then have to play the game hoping that values will increase, or at least know your house is affordable for you. My house is affordable for me, I also know I can rent it and more than cover my mortgage, I know I can stay in London if needs be, but my current issue is how to change to a BTL, not whether I should have waited to raise a deposit or not, it's academic now!

Any further suggestions on other options would be really great

Thanks

TQ

meanmachine_2

If you can get 85% LTV, then I'd check the various online comparison sites. Should be fairly straightforward.

Moneyextra's one (via MSN money) is fairly easy to use.

I take your point about 100% mortgages - and at least you're aware of the risk.

homer_j_3

I would get a few more estate agents around to see if they quote is low, high or average

I would also get rental figures from them..

Travelqueen

Thanks for this.

As a brief update I have now spoken to an advisor about the possibility of going to one lender with the 'problem' to see what they can offer. It seems as though Northern Rock would be able to help, especially as they also do 87% LTV which would mean my house needed to be worth £245,000 which should be more achieveable!

RE: rent, as I already live with two lodgers I have a fair idea of what the rent would be, but I'll start by crossing one bridge at a time - 1st challenge definitive job offer... although, am glad I started looking into this as it seems like I am going to be offered the new job in Leeds and I'd definately need somewhere to live if this happened!

Thanks again

TQ