Changing to buy to let mortgage and renting

a1a1a1

Hi all,

(Apologies but I have searched the forums but not been able to find the right answer).

I was hoping someone would be able to give me some advice.

My and my now ex-partner have split up. We have a house and a mortgage with HSBC - currently SVR. We bought the house for £97k and it is now worth between £90-95k. The house is not in negative equity - approx £82k remaining on mortgage. Mortgage payments are approx £500pcm

The option is to sell the house or for me to give her £5k to buy her out. I wouldn't want to live in the house but would consider renting it out. I'm pretty sure I could easily get a tenant to cover the mortgage as rental values in my area are pretty high.

However, I wondered if anyone had any experience of changing to buy to let with HSBC or any other mortgage company.

I do understand my other responsibilities with regards to renting but any tips would also be appreciated.

Thanks in advance.

kingstreet

You can ask HSBC for consent to let the property.

You will be unable to remortgage to a new lender as you have insufficient equity to get the maximum 85% mortgage you would need (ie £82k mortgage needs a minimum value of £96.5k), for a BTL.

holly_hobby

You may not necessarily have to change to a buy to let mortgage - as this has been your main residence you could ask your bank for their "consent to let".

This means that you remain within the terms of your mge contract (having recd the banks agreement to hte let). You say you are on SVR, and I would imagne they will just leave you on that rate. (if you were on a mortgage product say a fixed rate, then they would have the right to remove you from this scheme when renting the property).

Of course you know about declaring the rental income for income tax (net of allowable deductions) - together with CGT liability on disposal (net of pre-occupier & annual allowance reductions ).

Make sure you get an AST (assured shorthold tenancy) in place, and landlord insurance - you may want to consider using an ARLA letting agt to manage the rental for you (which includes screening applicants etc).

Hope this helps

Holly

a1a1a1

Thanks for your help. Really appreciate it.

Is straightforward, common to get "consent to let"?

GMS

Asking for it will be straightforward but getting it is at the discretion of the lender. They are under no obligation to agree to it.

a1a1a1

For buy to let mortgages what - roughly - is the interest rate premium? and what LTV are we talking about?

kingstreet

At 90% BTL remortgage there are 0 products.

At 85% BTL remortgage there are 3 products. Rate 5.79% £1,600 fees.

At 80% BTL remortgage there are 19 products. Rate 5.79% £1,600 fees.

There are other products, but the rates are higher, or the fees are higher. The one shown is the best compromise.

You'll need the rental income to exceed the monthly mortgage interest-only payment by 25%.