Buy to Let mortgage - is this deal a no brainer??

Spud_2

We're currently planning to move to a bigger house and rent out our existing home rather than sell in the current downturn.

We need a buy to let mortgage on our current place to raise a deposit for the new one. Our existing lender (One Account) has said they can do both mortgages as one big pot, at their going interest rate of 3.75%.

The only fees involved are £320 valuation and £20 completion. Our LTV for both mortgages lumped together would be 65%.

We're new to the buy to let market, but this does seem like a no brainer of a deal because of the usually high fees + higher interest rates for BTL - any thoughts, or have we missed something? Any advice from those in the know would be much appreciated!

Cannon_Fodder

Are you sure they understood your plans thoroughly?

http://www.oneaccount.com/onev3/who/toa-who.shtml

"Please note:
We can't currently lend against 'right-to-buy' properties, 'buy-to-let' properties or homes that are part-owned by a housing association or local council."


Maybe they view your main residence becoming a rental as "accidental"...but I doubt that would remain so for the long-term.

mruddy

if you are renting your existing home to move to a bigger one then maybe they are doing a let to buy mortgage. i have recently done this with Ulster Bank in NI and we had no rpoblems what so ever.

Let_Us_See

Does seem to be too good to be true! Get it in writing.

Spud_2

Cannon_Fodder wrote: »

Are you sure they understood your plans thoroughly?

http://www.oneaccount.com/onev3/who/toa-who.shtml

"Please note:
We can't currently lend against 'right-to-buy' properties, 'buy-to-let' properties or homes that are part-owned by a housing association or local council."


Maybe they view your main residence becoming a rental as "accidental"...but I doubt that would remain so for the long-term.

They advised that they would only do a 'consent to let' on our current property if use them for our mortgage for the new property. Otherwise they don't offer buy-to-lets.

JonnyBravo

Cannon_Fodder wrote: »

Are you sure they understood your plans thoroughly?

http://www.oneaccount.com/onev3/who/toa-who.shtml

"Please note:
We can't currently lend against 'right-to-buy' properties, 'buy-to-let' properties or homes that are part-owned by a housing association or local council."


Maybe they view your main residence becoming a rental as "accidental"...but I doubt that would remain so for the long-term.

I have no knowledge of the oneaccount but this sounds very simliar to how I arranged our borrowing via our bank who have similar rules.

The mortgage maybe entirely secured on the new house they are moving into, (as far as the lender is concerned it is a normal owner occupier mortgage), yet that doesn't necessarily stop you being able to offset the interest for your BTL for tax purposes.

I'd check they are clear on your plans. Check on which property the loan is secured against etc
Getting it in writing seems a good idea. Avoid being stung for (m)any charges before completion!

Gorgeous_George

How much are you borrowing and what are the values of the properties involved? It could be that your total borrowing meets their LTV against just the higher valued property.

You need to make sure that you can work out how much interest is being paid for the BTL or you could fall foul of tax laws when offsetting interest against income. This shouldn't be a problem as it is the purpose of the loan and not the property on which it is secured that matters to HMRC.

By way of an example...

Let property = £125K
New property = £250K

65% LTV = £243,750

So, you borrow £243,750 which is 97.5% LTV secured against the new property. AIUI, £125K can be offset against rental income for tax purposes.

GG

ETA, Crossed post with JB.

Spud_2

Gorgeous_George wrote: »

How much are you borrowing and what are the values of the properties involved? It could be that your total borrowing meets their LTV against just the higher valued property.

You need to make sure that you can work out how much interest is being paid for the BTL or you could fall foul of tax laws when offsetting interest against income. This shouldn't be a problem as it is the purpose of the loan and not the property on which it is secured that matters to HMRC.

By way of an example...

Let property = £125K
New property = £250K

65% LTV = £243,750

So, you borrow £243,750 which is 97.5% LTV secured against the new property. AIUI, £125K can be offset against rental income for tax purposes.

GG

ETA, Crossed post with JB.

Value of current property - £300K
Let to buy remortgage against current property - £150K + £16K to pay remaining mortgage
Value of new property - £500K
New residential mortgage - £350K

Total lending therefore £516K :eek: against property worth £800K - total LTV 65%. The One Account max LTV lending is now 75% so they can't be taking whole loan against new residential property.

getmore4less

What will the place rent for?

Spud_2

We've been told £1150pm