Switching to buy to let?

headphones

Hi,

I'm a bit worried about asking this question directly to my mortgage provider without first getting a bit of feedback from the MSE forum members.

I took an mortgage out in 2001-2002 for a 3-bed house. I put 16k down on a property that I bought for 80k. Having done some research the property would now be valued at 100 - 120k.

So far so simple.

In 2009 however I moved abroad. I'd previously had a friend living in one of the spare rooms and he stayed on when I moved, with another friend taking over my old bedroom. The scenario has basically stayed the same since, just with different friends living there.

I've always had the required gas and electric certificates but am now and have never had any problems with my friends living there but having just been given notice by one of them, I feel it is now time to hand over the property to a letting agency for them to look after, as amongst other things I feel I would actually benefit from this, as until now I have been paying the electric, gas and water.

My concern therefore is as I had a residential mortgage and will now clearly be using the property for purely letting purposes what is the best practice regarding mortages? I am aware that buy to let mortgages are more but I would like to do things fully by the book. Having researched a bit on the net, it seems that BTL mortgages are now harder to get and I don't want to be stuck in a grey zone.

Any advice anyone can offer me on this, I would be incredibly grateful.

Thank you

headphones

I suppose an additional question to this is that I'm overdue looking at if a transferring my mortgage to another lender would be the best option, as I'm not sure mine (with HSBC) is the best I could get. Obviously this would throw up more questions though and it might just be simpler staying with HSBC.

BitterAndTwisted

Most BTL lenders insist on you having at least 25% equity in the property but I dunno how your status as an ex-pat may affect their willingness to lend. Have you looked into asking your residential mortgage-provider for Consent To Let rather than going down the BTL mortgage route? You'll also need to look into how your tax-status will be affected as well, being a non-dom etcetera

blt

I'm with Lloyds TSB and phoned them about switching my repayment mortgage to a BTL. They told me that it was fine to switch to this product, regardless of equity, if you're already a customer. It was only if you were a new customer that the rules regarding deposits etc stood - if that makes sense?

headphones

Thanks B&T, I'd since looked at another post and there was the suggestion that you could ask your mortgage provider for permission to change to consent to let, which I think sounds a pretty appealing option, although I suppose I am still slightly nervous considering I haven't advised them of this before. I'll of course look at my tax implications.

headphones

blt wrote: »

I'm with Lloyds TSB and phoned them about switching my repayment mortgage to a BTL. They told me that it was fine to switch to this product, regardless of equity, if you're already a customer. It was only if you were a new customer that the rules regarding deposits etc stood - if that makes sense?

Yes that makes sense. Did you switch to a higher rate BTL then? I suppose as B&T suggested the option of getting consent would be more of an attractive option.

BitterAndTwisted

It might be more attractive and as you haven't declared that you've had lodgers in the property in your place I wouldn't let them know now. That's between you and the tax-man.

yanda

if it makes a difference I contacted abby/santander a few days ago in regards to consent to let, they said I can have consent for a £295 fee as long as the mortgage stays on their SVR, if I was to fix/get new deal then i'd have to apply for a BTL mortgage. Consent is only given where rental income is 125%+ of mortgage cost.

I wouldn't worry about contacting them to enquire, think of the amount of people looking to rent their houses rather than sell due to the housing market, it the sort of thing they can calculate over the phone, no need for paperwork/credit checks etc unless you actually went ahead with it.

blt

headphones wrote: »

Yes that makes sense. Did you switch to a higher rate BTL then? I suppose as B&T suggested the option of getting consent would be more of an attractive option.

Hi,

They told me that as I was out of my fixed rate deal, and now on the SVR, I could just carry on with that - even though I would be buy to let. They told me that if I wanted to enter another fixed rate deal then at that point it would have to be a BTL fixed rate deal which would be more expensive.

The woman I spoke to was really helpful and said that it made better sense to swap to a fixed deal now because they would honour that on a BTL at a later date which was good.

As for the issue of already having tenants, I agree with the OP, what they don't know won't hurt them so don't tell them. As long as everythjing's been paid on time you'll have no problems.

Lubielu

headphones wrote: »

Thanks B&T, I'd since looked at another post and there was the suggestion that you could ask your mortgage provider for permission to change to consent to let, which I think sounds a pretty appealing option, although I suppose I am still slightly nervous considering I haven't advised them of this before. I'll of course look at my tax implications.

I got consent to let from HSBC in 2010 and it was relatively easy. If you have a relationship manager at the branch probably best to go through them - can be more helpful than mortgage service centre. There was no fee for getting the consent either.

I also found that it was better to stay with current lender rather than trying to switch. Other banks/BSs would require me to be on a BTL product which would be more expensive and require a larger equity amount.