Buy to Let/ Unemployment and Divorce

smerch1468

I own a property with my soon to be ex wife with a value of approx 260k, the mortgage balance is 178k. I was made redundant in April and have redundancy insurance to cover mortgage payments for a year.

My wife now wants to get a move on and leave our home and also have her name removed from the property. I have the money to buy her share out but clearly as I do not have an income will not qualify for a normal residential mortgage.

Is it possible whilst being unemployed to arrange a buy to let mortgage (LTV is about 67%) for say a year whilst I look for work. If possible I am also looking to take professional qualifications which will take 9 months.

I would have no alternative but to move back with my mother temporarily, but when I get back on my feet and get a job would like to take on the mortgage as an owner occupier again. So I guess that I would need something thats flexible enough to change from BTL to Residential without costing the earth.

Is this a viable proposal? Thoughts from the experts please.

Thrugelmir

Take the sensible option and sell the property.

Once the job situation becomes clearer then look forward.

smerch1468

Thrugelmir wrote: »

Take the sensible option and sell the property.

Once the job situation becomes clearer then look forward.

Im sorry I dont think thats sensible at all, given the amount of time, effort and money I have put into this property. Whats the point in selling up and then having to look for property again in a short period of time. Needless to say, there would be the cost of purchasing a property, moving costs, stamp duty etc....

I think I should speak to a specialist broker.

de1amo

some lenders require earnings but others just want a forcast of a realistic rent--i am looking at doing the same type of thing but i have put it in the hands of a İFA who can pin-poiint the right lender.

smerch1468

de1amo wrote: »

some lenders require earnings but others just want a forcast of a realistic rent--i am looking at doing the same type of thing but i have put it in the hands of a İFA who can pin-poiint the right lender.

Thanks for your feedback. Based on an interest rate of 5.5% which is widely available for BTL, the repayments would be about 775 against potential rental for the property of 1400 (guaranteed rental for housing association/council) and 1600 rental to private sector.

Clearly this would stack up. I just hope the fact that im unemployed doesnt affect things although my mother who has a 400k property with no mortgage, has said she would act as guarantor/joint owner if necessary.

de1amo

As i see it the lenders are taking the risk on the property and not you --its a commercial loan hence the higher interest rate. They work out the amount you can lend by giving you a maximum of 125pc of the mortgage against the rental income using a theoretical rate of a 7pc interest rate- if that makes sense!

My İFA has actually told me to expect to pay between 4 to 5 pc for a BTL so it could pay to get an İFA on the case!

smerch1468

de1amo wrote: »

As i see it the lenders are taking the risk on the property and not you --its a commercial loan hence the higher interest rate. They work out the amount you can lend by giving you a maximum of 125pc of the mortgage against the rental income using a theoretical rate of a 7pc interest rate- if that makes sense!

My İFA has actually told me to expect to pay between 4 to 5 pc for a BTL so it could pay to get an İFA on the case!

Ok so if we are looking at 7% then its about 1050 interest only, against 1400-1600 rental (133% to 152%).

As you say the deals are between 4-5% so it looks like if I cant live here that the property is a very good rental proposition.

Thanks again.