Confused about concent-to-let and new mortgage

selbailey

Hi..

So basically I have a house at present which i am living in - but me and my partner have seen a house we REALLY want.. i spoke to a broker who said I could change my house to a consent to let until it sold so i contacted my mortgage lender who confirmed they would change it to a concent to let..

soo that part all sorted with someone ready to move in as soon as im out (mortgage payments being £209 a month and i will be receiving £450 a month)

anyway me and my partner were accepted on our offer and on the mortgage in principle - but when we put in the application they declined us because I am full time employed and my partner is part time employed and part time self employed (had his business for 7 years) - they said because his business and his main job arent in the same line of work they will only accept 50% of his self employed job - they said its a risk... personally i think it would be more of a risk if it was int he same like of work!! anyway...

Nationwide will accept 100% of the business and part time job so that matter will hopefully be ok..

I am a bit concerned though about 2 things -

1. Will our credit be effected with the searches we have had done for the mortgages - how many before your credit lowers??

and

2. Will they accept my other house as a self funded let or would they take it into consideration and it effect the affordability - like how much would they lower our borrowing amount :S Im a bit worried because obviously on the form it has my address (which is the property im going to be letting out) and then that address for the actual let.. wont they wonder how im living there and renting it out as you cant write on a form that you have someone moving in as soon as the mortgage is agreed lol!

its really worrying me that we wont get this house

Anyone that has any advice would be great!!

Thanks

sophievenusdoom

Hiya,

I think once you have applied, and subsequently been declined, it will show on your credit report. For instance, with The Halifax, when they give you the initial AIP, it doesn't show on your credit report, but once the application has been made, it does. it might be worthwhile checking with your mortgage broker, or even the company themselves as to whether it has shown. Or even get a copy of your credit report to ascertain whether an entry has been made.

As far as the other query goes, from what I gather on these forums, being that the rent you will be charging your tenant more than covers your mortgage repayment, this will not been taken into account when it comes to affordability as this property will be seen as self sufficient.

Hope this helps, and good luck with your dream house :-)

Thrugelmir

soo that part all sorted with someone ready to move in as soon as im out (mortgage payments being £209 a month and i will be receiving £450 a month)

Only the interest element of the £209 will be allowable against rent income for tax purposes.

Though other certain costs are allowable.

So while the £450 rent and £209 mortgage may look attractive (£241). The expenses involved and tax payable on the net profit you make, will actually make it a lot less attractive.

sophievenusdoom

Thrugelmir wrote: »

Only the interest element of the £209 will be allowable against rent income for tax purposes.

Though other certain costs are allowable.

So while the £450 rent and £209 mortgage may look attractive (£241). The expenses involved and tax payable on the net profit you make, will actually make it a lot less attractive.

See, you learn something new every day

selbailey

hi.. thanks for your replies - I dont want to use the house as income.. we have enough with our wages to make us what we need.. i just didnt want them to look at the house and doubt our affordability because of it? so with me recieving £241 more then what the morgage wil be.. i thought maybe that wont look as worrying? or am i wrong?

sophievenusdoom

I think what Thrug was saying was that it won't be £241 per month once tax has been taken off, but I would imagine it would still be seen as a self sufficient property, so shouldn't be taken into account at affordability stage

Thrugelmir

Letting property is a business not an investment.

Take time to understand the total costs involved and possible downsides before committing to letting.

selbailey

Hi,

Im not letting as I want to profit etc.. Its because the current market at the moment and houses not selling - so its a short term thing until I can sell it.

I just want to make sure it doesnt jepodise me and my partners chances of getting a house.



Thanks

sophievenusdoom

It won't as it is a self sufficient property. If you want this clarifying by someone in the know, you can contact a whole of market adviser :-)

selbailey

Lol thanks.. I wasnt even worried about this before but because of the other people declining it because of the business etc its made me think of everything else! such a knock back.. stressful times!!

sorry to be a pain with the 10000s of questions haha.. but would they consider that as it wont be let out until I have moved out of it .. even though i do have someone waiting to rent it! jeez! if only it wasnt all done on forms and you could stress these points! lol x

sophievenusdoom

Lol! I know what you mean - buying a house is never stress-free!

Are you going through an IFA? If not, it might be best to as they might be able to make it crystal clear to the lender that this is your intention, and that you have someone ready and willing to move in!