Forced into unaffordable buy to let : HELP NEEDED

Phildanny

I have been trying to sell my house for 3 years, but have had no luck - even at auction !
I decided to let my property to allow me to move, I was on a FR with HALIFAX. They gave me consent to lease at no extra charge until the end of my FR. I was told I would then need a new product (I thought that ment another FR or SVR - I didn't know about Business Mortgages or BTL, I wasn't running a business or had any reaason to search that section of the HALIFAX website!).
I let my house out on a 12mt contract tor £1095pcm, my FR mortgage was £957pcm, HALIFAX said they were happy with. These numbers. I was also happy as I planned to change my mortgage to SVR at the end of my FR.
I am now on SVR = £1019pcm, I was happy to maintain this and expect bank base rate to remain at 0.5% long enough to allow me to sell eventually when the market picks up.
HELP NEEDED HERE - Now HALIFAX tell me I have to change to a Business BTL mortgage, this will increase to 2% above SVR, a mortgage of £1660pcm.
I can't raise the rent to cover the £561pcm difference and dont think it would be fair anyway!
I can't remortgage as I am now outside the 125% rent over mortgage rules.
I'm told that if I agree to the BTL mortgage then HALIFAX no longer have a 'duty of care' toward me as it is a business mortgage.
All of these figures are interest only, what should I do:-
1, sign the doc. to agree to the BTL rate, which I can't afford.
2, do not sign the doc., keep paying the SVR and see what HALIFAX does.

Can anyone help? Is anyone in a similar position?
Many thanks

ILW

Long term letting is a business. And you are expected to pay the business rate. Why not just sell, or move back in?

DannyboyMidlands

Sell it before you get repossesed or move back into it and sell the other one?

DominicJ_2

If it didnt sell, its because it was priced too highly.

Wh05apk

I suspect that you are currently on a repayment mortgage? most BTL mortgages are interest only and that is what the lenders will base their calculations on, provided you are under about 75% LTV the figures should work out, but speak to a broker for some proper advice.

Dave_Ham

The Lloyds Banking group are taking this area of their business in hand and they will follow through in this case unfortunately.

Is it not feasible to move back in, maybe take a lodger or make it work as you will then be ok on the SVR or can take another deal.

Are you currently on a repayment or interest only mortgage and what is your current mortgage value and approx. house value?

If you tell them you are trying to sell the property, they have been known to give you a stay of execution on the rate but it certainly will not be indefinitely.

Assuming and I think you will be, you are on a repayment mortgage then to be fair to the Halifax they were not going to leave you on an SVR whilst you rent out and that pays the mortgage for you as an investment.

Whilst I think their new rates are a bit too far the other way, strategically they get either all of their money back or a cash cow. Add in to that that pretty much the single biggest buy to let player is a part of the HBOS/Llloyds banking group it stacks up commercially.

I wish you well in any case.

Phildanny

Thank you Dave Ham, I can't move back in as I have a 12mt contract with my tennants. The house is worth £500,000 (Halifax valuation) £550,000 market valuation. Mortgage £360,000.
Already Interest Only !

MagicCats

If you cannot move in due to the 12 month contract, could you discuss the possibility of ending the tenancy early with your tenants? People who rent are often flexible and it may be cheaper for you to compensate them, break the lease and move back in, than to take the hit on the new rate?

Dave_Ham

I stand corrected, apologies.

I assumed that given a mortgage payment upto £1,100 approx and a rental of £1,100 it would be repayment.

This is because given the property valuation, you are renting lower than the norm.

Typically for a £500k property, I would expect rental in the region of £2k and therefore so do the Halifax..

I know it is not always correct and there are other dynamics, but I rent out properties I own valued £200-£250k for £1,100 a month - are you sure the agents are not pulling a fast one?

Appreciate this is an aside and with the main point in question, cannot see past you moving back in. Given the tax points, hard work to sell over £500k in current climate and therefore I appreciate your dilemma.

Would maybe think of re-financing to a buy to let and you will get better rates, albeit a big product fee and maybe taking some money out if you are looking for somewhere to buy as you could take a bit out.

Run it as a business then and know that you can still get a residential mortgage then should you want to.

I would also suggest you look at the local rental market yourself as this just plainly does not stack up to me..

real1314

Phildanny wrote: »

Thank you Dave Ham, I can't move back in as I have a 12mt contract with my tennants. The house is worth £500,000 (Halifax valuation) £550,000 market valuation. Mortgage £360,000.
Already Interest Only !

I bet it would sell if you put it up at £400k.

There's an option for you, and one that would have been available before you started to let it out.
You presumably didn't want to sell at that price. You chose to let it, rather than reduce your profit, without looking at the consequences.

:cool:

Thrugelmir

Phildanny wrote: »

Thank you Dave Ham, I can't move back in as I have a 12mt contract with my tennants. The house is worth £500,000 (Halifax valuation) £550,000 market valuation. Mortgage £360,000.
Already Interest Only !

Then give your tenants notice and sell the property. There's plenty of equity. So price the property keenly.

A 2.6% gross yield is the root cause of your problem.