Two properties, two mortgages - can we swap them over?

LBPEEP

Hi all,

I'm new here and have a question I wondered if anyone could help with.

We have two properties, one with a residential mortgage, one with a buy-to-let mortgage. Both are low loan to value ratios.

We would like to move from the property we currently live in (with the residential mortgage) to the one with the buy-to-let mortgage and then rent out what is currently our home. We don't need to borrow any more so just want a straightforward swap of the two mortgages, both of which are portable according to the terms and conditions.

How do we go about this? Has anyone done similar? I guess we just approach each mortgage lender (C and G for the residential and Bank of Ireland for the BtL) but am anxious about having to co-ordinate this and hoping to avoid having to involve a solicitor etc. to minimise costs.

Any advice? Thanks in advance.

Thrugelmir

LBPEEP wrote: »

so just want a straightforward swap of the two mortgages, both of which are portable according to the terms and conditions.

If you read the detailed terms and conditions you will find that you are unable to port your mortgage to a property you already own. So at the very least will need to remortgage to a different product.

holly_hobby

Unfortunately, you can not "just swap over" mortgages between properties ... although I can understand why you would think you can. (without discussing releasing equity - which others may mention, but I haven't as you haven't raised as a consideration)

Lets deal with what we can do ...

Property one (main residence)

Apply to your lender for "Consent To Let" (CTL). If they give their agreement, this means that you can leave your mge on this property where it is (as the mge rate and any saving in remortgage fees may be of more benefit than remortgaging to a BTL lender) .

Your current lender may charge an admin fee, and also amend the mortgage interest rate you are currently enjoying (although if already on SVR - most leave things as they are for the first 12 mths).

The lender may review this on an annual basis - after 12 mths on CTL they may add a loading to your rate if they haven't already done so.

You may at that time want to consider if a traditional BTL mge may be more beneficial rate wise. (of course there will be lender fees and possible legals (if you can't get a fee free remortgage deal at the time).

Of course if they refuse CTL - then you will of course need to source a BTL remortgage from outset.

Property 2 (current let property)

You can do this one of 2 ways ...

Approach your current lender for a change of mge product i.e from BTL to residential and choose an applicable deal from their portfolio (if they are still lending - and I'm not sure if BOI are).

If your current BTL is subject to early repayment fees - then BOI may wavie them (if they are no longer actively lending) and are looking to off load business, if not then any penalty fees will probably stand - even if you wish to remain with them as a mortgagor - but asking will reveal all !

So do check out what these are before you agree to go on a new product with them, as it may be cheaper if there are redemption pens, and their current deals for existing borrowers aren't too clever to move to a new residential lender altogether.

Should that be the case (and if you need to remortgage prop no 1 to a BTL lender), do have a chat with a whole of market broker (check their fees) to source who has the best fee free remortage deals.

HMRC

Advise HMRC that property no 2 is now your main residence (as it will take it out of the CGT pot ), you have 2 yrs to advise this.

Prop no 1 now falls into the CGT pot - with a possible CGT liability on disposal (net of allowances inc those relating to previous owner-occupancy).

FYI - if you are thinking of selling, and you do so within 3 yrs of vacating as your main /primiary residence - you will avoid any CGT liability - as the last 36 months of ownership (together for the period held as primary residence) are also excluded from any CGT calculation.

As you are already a landlord, I suspect that you are fully familiar with the requirement to declare (net) rental income for income tax purposes

Hope this helps

Holly

LBPEEP

Hmm this seems like it might be more tricky than I anticipated, which is a shame. I spoke to Bank of Ireland a month or so ago and they said I could move the buy to let for the cost of legal fees, so I didn't think this would be a problem. Having looked again at the C and G terms though, it says that I have to remortgage if I move once the initial fix is over (which it is) so no chance of holding onto my good SVR rate even if I was moving to a new property rather than one I already own.

Thanks both for your advice. I really appreciate it.

getmore4less

Why not just ask both for concent to change use?

holly_hobby

getmore4less wrote: »

Why not just ask both for concent to change use?

Exactly ... first thing I suggested to them.

Advised them to:-
Seek consent to let for residential with C&G
Change BTL to Residential with BOI
Advise HMRC of changes to main res.

Simples .... (if the lenders agree :T)

Holly