Less than £10k on mortgage but need to rent out - BTL or loan?

ManicMum

Hello

I may be needing to rent my property out. However, I have less than £10k remaining on mortgage. Getting a BTL seems expensive in terms of set-up costs, new legals, survey etc. A friend suggested a loan but guess interest rate would be higher.

Does anyone know what my best bet would be? Are there any really favourable loans out there? Or could I balance transfer a 0% credit card and keep shifting? Might be tricky if living abroad though, I would imagine.

My current lender says 'NO' to my request to let.

thanks.

ACG

I dont know of any lenders that would do a mortgage for £10k to be honest.

I think your options are a loan or credit card. A loan would definately be the easier and atleast you know that you wont have problems trying to arrange another one in however many years unlike a credit card.

I take it your not interested in selling it and maybe buying a cheaper property or keeping the money? Dont forget as a landlord you have responsibilities - gas safety checks etc. Declaring any rental income to hmrc and possibly capital gains later down the line?

ManicMum

Thanks. Yes, am aware of obligations as have been a landlord twice before. What would be the smallest mortgage you could get? Unless I take some cash out of the mortgage (offset) to increase it. Would that be a better bet?

The_J

Who is your current lender?

Perelandra

If your credit record is good, for <10k somewhere like Zopa might be an alternative to going to a high street lender as well. You'd get a better rate.

Check any repayment charges on the 10k mortgage as well, of course.

rothchick

Why did your lender say no? Did they say? Does your lender offer consent to lease to existing borrowers rather than buy to let?

ACG

Minimum mortgages tend to be around £25k

ManicMum

First Direct is lender.

Said they don't allow people to rent out properties except in exceptional cases. Spoke to them again and said if I get mortgage down to below £5k they will let me for 6 months. So thinking maybe get a small loan and then keep it on the mortgage for 6 months until paid off by the rent.

cheers.

jamesd

Seems like a good plan, but do look at 0% credit cards. Chances are that if you have a good enough credit record for FD you'll easily be able to get the sort of amounts you need at 0% plus initial charge from the cards. A 0% for purchases card can be even cheaper if you spend enough to build up the balance rapidly enough, since that avoids the initial balance transfer fee.

Do you even need to rent it out? If this is a short term thing for a year or two it might be worth not bothering. Nil council tax for a vacant property for a year and very low mortgage interest cost for just £10k borrowed. Though the rent lost might make it worthwhile anyway.