consent to let + buy new home

skywalker1

Hi there, wonder if anyone could help me on a dilemma we are facing at the minute. I am planning on buying a new home with my girlfriend, and selling my existing home to release equity to put down a 25% deposit on the new one.

I will be porting the mortgage on a low interest rate, and getting my girlfriend put on the mortgage. I will be getting a document drawn up to say the deposit money is mine if we split.

Where the fun begins -

My girlfriend has a 100% interest only mortgage on a flat, which is likely to be a few grand in negative equity.
She has rented it out for the past 3 or so years with a Consent to Let. This will ultimately come to an end in September - she applied for extension 2 years ago already.

Question 1-
Will putting her name on my mortgage cause a problem with the first mortgage? I can afford our new mortgage on my own (from a maths/borrowing at the bank point of view), so can keep just my name for now if need be. If in September she has her name on another mortgage, will her mortgage company know/need to know? This presumably would be a big sway in terms of whether she is allowed to extend again, or whether she is forced to BTL?

Question 2-
Given she lived in the flat on a regular mortgage for about 4 years before changing to consent to let, when it boils down to her mortgage company talking about BTL - will they apply the crazy setup fees and 25% minimum equity? Or just up the interest rate a bit?

Really looking forward to your answers.

hunnie

Hi,
This is a little too complicated for a lay person to answer.
Only the mortgage company knows their criteria.

I think your girl friend has done well to organise and maintain her consent to let - many would just hope no-one finds out!!

It is a positive that this is in place but I personally know nothing about what happens when this consent ends.

Hope you get advice soon.
Regards
Hunnie

Thrugelmir

Suggest you look at selling you g/f's property as a first step.

skywalker1

OK, thanks for your comments.
I think the very first step then would be to enquire with her mortgage company what would happen in the various scenarios. I guess that's better then burying our heads and hoping for the best!

kingstreet

skywalker1 wrote: »

Question 1-
Will putting her name on my mortgage cause a problem with the first mortgage?

No.

I can afford our new mortgage on my own (from a maths/borrowing at the bank point of view), so can keep just my name for now if need be. If in September she has her name on another mortgage, will her mortgage company know/need to know?

No. If they ask, she must tell them, but they are unlikely to do so.

This presumably would be a big sway in terms of whether she is allowed to extend again, or whether she is forced to BTL?

Probably not. They tend to give it, or not give it. They probably won't ask questions.

Question 2-
Given she lived in the flat on a regular mortgage for about 4 years before changing to consent to let, when it boils down to her mortgage company talking about BTL - will they apply the crazy setup fees and 25% minimum equity? Or just up the interest rate a bit? Really looking forward to your answers.

You're confusing two issues. A lender grants consent to let or it doesn't. It may apply charges for that consent to let. Halifax, for example, is happy to give consent indefinitely but insists on the borrower changing to a consent to let product.

If the lender wishes to withdraw consent, she will be required to leave that lender by repaying her mortgage. Changing to a formal BTL will involve remortgaging to a new lender and as there is no equity in the property this will be impossible.

The lender's options will be as follows;-

- continued consent to let at residential rate
- continued consent to let at a higher rate/ fee charged
- withdrawn consent.

As for her inclusion on your new mortgage, it might be worth seeking the advice of your lender. You need to check it will allow a change to joint, while porting. You may need to do a transfer of equity to add her to the current mortgage before you sell.

You also need to establish how it will treat her existing mortgage. Some lenders will ignore a let property in the background. Others will deduct the cost of the mortgage from her income. Others still deduct the capital amount of the mortgage from her borrowing power.