Do I need a buy to let mortgage?

nightsky224

me and my oh have the opportunity to buy my recently deceased grandmothers house and just wanted a bit of advice.

We currently rent - neither of us have had a mortgage before
We are saving for a deposit but currently don't have a big enough deposit to buy in the are we want to. My grandmothers house is further north so cheaper and we are able to afford it. We may live it in for a while but we are not really sure, we may rent it out. What type of Mortgage do we need, normal or buy to let?

Its an odd one I know!! Hope some one can help.

holly_hobby

Ok - if you have intention to live it in, a normal residential mortgage will be reqd.

Which if you subsequently decide to rent it out, you can later seek the lenders "consent to let" (CTL) - whereby they will usually (but not always) give their permission to let - they may add a loading to any mge rate you are on at that time & usually an admin fee is payable.

CTL is normally reviewed on an annual basis - and the lender may well give you from outset a final end date when they advise they will withdraw their consent to any future letting. (you would then, if you intent to keep letting, remortgage to a standard buy to let mortgage & lender)

Residential mge deposit - minimum of 10% - obviously the larger the deposit the more attractive the interest rate available

OR

If you intend to let from outset - you will need a buy to let mortgage from outset.

Minimum of 15% (the mortgage works) who also accept first time landlords, depending upon your deposit other lenders will be available to you.

Speak to a whole of market broker to source the most suitable lender in the market for your requirements (and for whichever avenue you decide to go down)

Of course in all cases you shall have to meet the lenders criteria & status checks.

Hope this helps

Holly

nightsky224

holly_hobby wrote: »

Ok - if you have intention to live it in, a normal residential mortgage will be reqd.

Which if you subsequently decide to rent it out, you can later seek the lenders "consent to let" (CTL) - whereby they will usually (but not always) give their permission to let - they may add a loading to any mge rate you are on at that time & usually an admin fee is payable.

CTL is normally reviewed on an annual basis - and the lender may well give you from outset a final end date when they advise they will withdraw their consent to any future letting. (you would then, if you intent to keep letting, remortgage to a standard buy to let mortgage & lender)

Residential mge deposit - minimum of 10% - obviously the larger the deposit the more attractive the interest rate available

OR

If you intend to let from outset - you will need a buy to let mortgage from outset.

Minimum of 15% (the mortgage works) who also accept first time landlords, depending upon your deposit other lenders will be available to you.

Speak to a whole of market broker to source the most suitable lender in the market for your requirements (and for whichever avenue you decide to go down)

Of course in all cases you shall have to meet the lenders criteria & status checks.

Hope this helps

Holly

Thanks holly, yes very usefull. I think after further discussions with my OH we would want to buy it on a buy to let basis. Going to set up a meet with a mortgage advisor now.

holly_hobby

Great .....

Dont forget you will have to pay income tax (net of allowances) on any rental income achieved.

Assuming annual rent will exceed £2,500 pa - declared by submission of annual self assessment (you shall have to register for this svc ir you don't currently utilise it).

There are various tax allowances which you can offset tax due on rental income, which your broker should be able to assist you, or HMRC will give you full details if you contact them or google their website.

Sale of the property (if never resided in as your main residence pre disposal) will be subject to capital gains tax on the total gain achieved on sale/disposal (less annual cgt allowance).

Hope it all goes well ..

Holly

GMS

Minimum of 15% (the mortgage works) who also accept first time landlords, depending upon your deposit other lenders will be available to you.


The Mortgage Works will allow First Time Landlords but you must be an owner occupier. As the OP rents currently they would not be eligible for TMW.

nightsky224

GMS wrote: »

Minimum of 15% (the mortgage works) who also accept first time landlords, depending upon your deposit other lenders will be available to you.


The Mortgage Works will allow First Time Landlords but you must be an owner occupier. As the OP rents currently they would not be eligible for TMW.

Ah ok, well hopefully there will be some other options.

GMS

How much are you buying for and how much deposit do you have?

What is your income?

holly_hobby

GMS wrote: »

The Mortgage Works will allow First Time Landlords but you must be an owner occupier. As the OP rents currently they would not be eligible for TMW.

Ah .. well spotted ... !

As an active mge adviser, could you give the OP advice on who's active in the market for them & their situ ?

H x

nightsky224

holly_hobby wrote: »

Ah .. well spotted ... !

As an active mge adviser, could you give the OP advice on who's active in the market for them & their situ ?

H x

That would be great if you couls. I kno its an odd situation to buy to let when we dont currently own. We want to live in an area that is very expensive to buy but not to bad to rent. We thought that bying this property would be a better solution. We have about 35k deposit at the moment increasing at about 1k per month

GMS

nightsky224 wrote: »

That would be great if you couls. I kno its an odd situation to buy to let when we dont currently own. We want to live in an area that is very expensive to buy but not to bad to rent. We thought that bying this property would be a better solution. We have about 35k deposit at the moment increasing at about 1k per month

What would be the purchase price? What income do you have? How much rent would you expect per month?

nightsky224

Price would be 150-180k not 100% sure yet. Rental income between 700-800. Our income is £75k total. May need about 10K of work doing to the property