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BTL or Regular Mortgage?
thewaterboy
Posts: 16 Forumite
I had this question in the mortgages forum but got no replys, so i've moved it here hoping for more success!
My dad and I are considering buying a property, as an investment, and renting it out. My dad owns a house and I live with him and do not own a property myself. We need advice on whether or not to take out a BTL mortgage.
The advantages of a BTL mortgage is that we can hopefully rent the property out from day 1, but the disadvantage is that we will be liable for capital gains tax.
The other option is that we takle out a regular mortgage and I live in the house for a few months. I then phone the bank and ask them is it ok to rent out the property. Assuming the bank agrees, we can then rent the property out and will not have to pay capital gains tax for the period i lived there plus three years.
Which seems the better option? Are banks happy to allow you to rent out the property after you have only lived there for 3 months? Any advice is much appreciated!
My dad and I are considering buying a property, as an investment, and renting it out. My dad owns a house and I live with him and do not own a property myself. We need advice on whether or not to take out a BTL mortgage.
The advantages of a BTL mortgage is that we can hopefully rent the property out from day 1, but the disadvantage is that we will be liable for capital gains tax.
The other option is that we takle out a regular mortgage and I live in the house for a few months. I then phone the bank and ask them is it ok to rent out the property. Assuming the bank agrees, we can then rent the property out and will not have to pay capital gains tax for the period i lived there plus three years.
Which seems the better option? Are banks happy to allow you to rent out the property after you have only lived there for 3 months? Any advice is much appreciated!
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Comments
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are you planning to buy based on both your incomes? or on the potential retal income?0
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From looking into a number of different mortgages from online search engines it would seem that we are able to take out a mortgage based on either my dads income (not mine as im a student for this year!) or the potential rent. So it would seem to make no differerce either way.0
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Waterboy,
I think you need to decide on exactly what you are going to do. Buying to let throws up too many options, its much harder than buying a home to live in. Buy the property through the eyes of your intended market.
I don’t think a mortgage company would be happy to allow you to rent the whole house if purchaced on a normal owner mortgage. A room rent would be fine. BTL are smaller LTV about 85% is the best you will get at the moment. I think this answers the question as the Mortgage Company’s know BTL is a greater risk so will only lend to 85%.
If you remortgage your Dads house he, or you in the future may not be able to claim tax relief in the interest.
Capital gains can be avoided if you live in the property (on the electorial role, council tax) for (I think) 6 months before you sell it. Otherwise you will pay it on the profit, not the whole ammount. Many costs are tax deductable.
From my experience get a BTL if you are going to rent it.0
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