Let to Buy

PoorDave

I am thinking of letting out my existing residence.

It is mortgaged, with around £135k outstanding, and is probably worth £160k+ (that's what we bought it for a while ago, and my knowledge of the local market tells me it won't be less than that).

This seems to mean we have just over 15% owned, so is that enough to call up the lender and let them know of my intentions?

Will they ask for more/anything else?

Anyone any experience of this, either from the mortgae side (brokers) or the home owner side?

We would then plan to rent somewhere in the new area we're moving to, before buying somewhere once the dust has settled.

PoorDave

I should add I'm currently with Nationwide for the mortgage, if it makes a difference.

Will I be able to keep the same mortgage product (some time left in a fixed rate) or do i have to change it to a "proper" BTL mortgage?

And should I have posted this on the mortgages board...?

UK007BullDog

Nationwide, you need to go to their website and you need to read your mortgage documents to find out if they will agree to you moving out and letters in.

You need to make sure you will be able to get enough rent to pay for the mortgage.

Most lenders do not really care unofficially as long as they get their money.

But the best thing is to contact a broker or read the small print of your mortgage docs to find out what you can and cannot do.

lowis

i am about to get a mortgage with the NW and would be looking to investigate LTB within the next 12-18 months hopefully. obviosuly I would get a broker to look into this for me at the time but are LTB mortgages much different to BTL mortgages?

PoorDave

lowis wrote:

i am about to get a mortgage with the NW and would be looking to investigate LTB within the next 12-18 months hopefully. obviosuly I would get a broker to look into this for me at the time but are LTB mortgages much different to BTL mortgages?

Beginner's question: Is there such a thing as a specific LTB mortgage? Obviously i know there are BTL ones.

I am so far assuming that i need to tell/ask my lender when i let my house, and that they might say "you have 15% capital in the house (seems to be min BTL deposit) so we're ok with it" and then I keep my existing fixed rate "residential" type mortgage without having to re-mortgage onto some other specific product (costs!)

lowis

i have no idea if LTB mortgage exists actually - i saw someone refer to it on here yesterday.

UK007BullDog

They do not exist as such, but they do. A grey area.

The first thing you need to do is check out your docs.

Then find out the going rents in your area for your type of property.

Then you get a letter from an estate agent that the resonable rent you could possibly expect to get is high enough to make your property self financing. If it does then the lender might not object to it. The key word being SELF FINANCING, if it is not then no chance.

Also Nationwide are more a residential lender and not really into BTL's. If you want to go the LTB route in the future then look at Alliance and Leicester or Mortgage Express for instance, as they do BTL. But always check with a broker and tell them your future plans or it might go pearshape! Give yourself at least 2 years going from residentioal to a LTB as you need the equity as well. Plus better rates if fixed or tracker at 2 yrs or 3 yrs. Otherwise big penalty charges.

PoorDave

I am going to try to remember to call NW about this on Friday when I have time.

My concern is that i'm on a good fixed rate at the mo, and would like to stay that way when renting (if possible) started. However, i feel that the affordabilty might not be there unless we switch to interest only.

The reaons for this "project" are:

We are moving to a new area in the next year or so

and

We think the ex-council house we own will be easier to rent than sell, as it's surrounded (mostly) by other renters too

tw1nklestar

i had a let to buy mortgage 7 years ago as we were trapped in negative equity - at the time on 2 money lenders would do these mortgages one being the company we went with - there were lots of clauses as to who we could and who we couldnt rent to - for instance no body on housing benefit - we sold the property 2 years later but because of a married break down i still have to pay the rent to buy mortgage rate which is higher than the basic rate

rsvtoddy

Just done a similar thing - check out the Coventry building society rates for BTL - very competitive and no early repayment charges (no I'm not connected!)