renting to buy, a few quick questions

dave1982_2

hi, i have a few quick questions that id like to ask about renting my current property and buying a 2nd one to live in. i will be speaking to my mortgage lender later on today but id thought id try and get a heads-up anyway, so thanks in advance.

currently i own a 2 bedroom apartment and have about 5k's worth of negative equity. this is my current home and we have never defaulted on mortgage payment or anything else.

we now may have to oppertunity to buy a 2nd property with quite a hefty deposit. we have no other loans, credit cards or car finance to worry about, and the rent i can achieve will cover the mortgage on my current home.

so question 1 how likely is it that i am going to be able to rent out this property. i know id need consent from my lender.

2 - what finance options are avaliable to me. do i do a let-to-buy if this is possible?

i have used mortgage calculators with deposit etc, but would like to know if there is anyone is the same situation and what they are doing, or what ppl have done in the past.

many thanks for your time.

dave1982

BitterAndTwisted

This is probably the 100th post about the very same scenario in the last ten days. it seems that everyone and their dog who can't sell suddenly thinks that becoming a landlord is a fantastically great idea. Sometimes it just isn't unless you have nerves of steel and you really are in it for the long haul. Never mind a decent understanding of all the Landlord & Tenant Legislation without which you could find yourself up !!!!!! creek without a paddle really, really quickly.

It's possible that your lender may agree to give you Consent To Let rather than convert your residential mortgage to a Buy-To-Let one. With negative equity you will never qualify for a BTL one.

Only contemplate going down this route if you know you can afford both the mortgage payments and the rent on both of the properties. Anything else could be financial suicide. A very slow and ugly one.

Edit: Correction: you can afford both mortgages.

dave1982_2

BitterAndTwisted wrote: »

This is probably the 100th post about the very same scenario in the last ten days. it seems that everyone and their dog who can't sell suddenly thinks that becoming a landlord is a fantastically great idea. Sometimes it just isn't unless you have nerves of steel and you really are in it for the long haul. Never mind a decent understanding of all the Landlord & Tenant Legislation without which you could find yourself up !!!!!! creek without a paddle really, really quickly.

thankyou for your quick response.

I do not wish to sell my current property i want to keep it, however obviously it would make alot more sense if it was rented out rather than left empty.

we are fortunate enough to be able to afford both mortgages on both the one i currently live in, and the one i want to move into.

my brother is a lettings manager so i am clear where i stand regarding my responsibilities and yes this is a long term thing and not something thats been dreamt up overnight.

thankyou for pointing out the dangers of this, however that is not what i wanted. i know alot of ppl go into this sort of thing with their eyes closed, or like you say, "the i cant sell so il rent" scenario.

all i wanted to know was how likely the mortgage lender are to allow this, and if there are any other finance options i havent considered.

BitterAndTwisted

You either request Consent To Let from your lender or pay off enough to get the property out of neg equity and apply for a Buy-To-Let mortgage. I understand that most, if not all, lenders require an LTV of 80% for BTL or that the rent will be 125% of the mortgage. Something like that.

Going by the number of enquiries we get on this forum admitting that your brother is a lettings manager will get a fair few scathing comments on here. It appears that an awful lot of letting agents know less about the LL&T legislation than I do, so having one to advise you might not be the risk-mitigating strategy you hope. He might be one of the few who knows what he's talking about, however. At the very least he'll be able to advise you about how to avoid the usual "professional tenants" which altogether too many amateur landlords fall foul of and how you might be able to go about insuring against such a risk and whatnot. He doesn't work for F*xtons, I hope

dave1982_2

no he works for a small private company who get alot of their business due to reputation. if he was a CO%^ i wouldnt use him myself. i will be requesting consent to let and gonna see what they say. if they say no then il go from there.

dave1982_2

to let you know. My lender was very good. had to go no other explanation other than i just wanted to let the property out. they are sending a consent to let form. costs £100 admin charge, and can rent for as long as i like. not sure if im allowed to name drop lenders or anything so i wont.