Buy & Partial Let

indieinferno

Hello All,

I've been looking around this morning for the right mortgage product and I'm not sure it exists so over to y'all to se who can put me on the right path.

My wife and I both had small places when we met so we lived in one and rented out the other. Roll on a couple of years and we'd like to buy somewhere bigger to start a family but still keep and rent out our two places as a nest egg for our future.

So far so good and we've seen a place we really think could be somewhere special with a lot of TLC. It's a big old run-down victorian semi that is currently two large flats but being sold as a single lot with the freehold.

What we'd like to do is get a mortgage that lets us rent out the flat that's in better condition whilst we live-in and start the long process of getting the other flat ship shape (the structure is OK but there is lots and lots of cosmetic work to do).

Now we want to avoid a buy-to-let product due to the very large deposit and setup fees required and poor rates. We would be able to put up somewhere around 15% deposit of the asking price without having to dip into the equity of our existing places and we would be able to service the full mortagage payments regardless of the rental situation.

So my questions are do mortgage providers have products for these kind of scenarios and should we expect to be rewarded or penalised for a partial rent scenario (you'd like to think you'd get preferential rates for carrying less risk but probably not)?

Thanks
Steve

handytips

If it is that run down, there is likely to be a massive retention on the property until the work is done. But to answer your question. No there are no mortgage products that suits your scenario. Sorry.

indieinferno

handytips wrote: »

If it is that run down, there is likely to be a massive retention on the property until the work is done. But to answer your question. No there are no mortgage products that suits your scenario. Sorry.

Thanks for the info, bit dissapointing but there you go. At least we know now.

Dave_Ham

Hi Steve,

So you want to buy a property (that is currently 2) and let out essentially one half.

But you do not want a buy to let mortgage as you do not like the rates, product fees or deposit requirements.

Reality check time? and maybe you were joking about preferential rates.

Seriously, no property investor (which is what you are by definition) likes commercial rates as they minimise profit. The banks know this and they are higher risk and therefore this plan is a non starter.

There are also a fair few legal/mortgage considerations to this sort of leasehold/freehold purchase as 1..

Either get some further advice and see a mortgage specialist about the most cost effective way this can be done, or start looking for the next property..

If you already have consent to let on the first of your properties, you may also find the lender being a bit stricter next time it comes to renewal.

Good luck

indieinferno

Dave_Ham wrote: »

Reality check time? and maybe you were joking about preferential rates.

Reality checks are probably in order so no problem, my wife always says I'm far to much of an optimist when it comes to money matters. Aparently 'It'll all sort itself out, don't worry' doesn't constitute sound financial planning for our future

OK, well looks like I need to read up on these implications and see what we can do.

Thanks

Dave_Ham

indieinferno wrote: »

Reality checks are probably in order so no problem, my wife always says I'm far to much of an optimist when it comes to money matters. Aparently 'It'll all sort itself out, don't worry' doesn't constitute sound financial planning for our future

OK, well looks like I need to read up on these implications and see what we can do.

Thanks

I think it is a "man" thing - we have all been there..

Search this forum and you will find the nth degree of detail on all of the issues you are up against..

Good luck

The_J

This will be extremely hard, it's basically commercial so you'll need to speak to a commercial broker. At 85% I do not fancy your chances.

Simon_gloster

indieinferno wrote: »

Hello All,

I've been looking around this morning for the right mortgage product and I'm not sure it exists so over to y'all to se who can put me on the right path.

My wife and I both had small places when we met so we lived in one and rented out the other. Roll on a couple of years and we'd like to buy somewhere bigger to start a family but still keep and rent out our two places as a nest egg for our future.

So far so good and we've seen a place we really think could be somewhere special with a lot of TLC. It's a big old run-down victorian semi that is currently two large flats but being sold as a single lot with the freehold.

What we'd like to do is get a mortgage that lets us rent out the flat that's in better condition whilst we live-in and start the long process of getting the other flat ship shape (the structure is OK but there is lots and lots of cosmetic work to do).

Now we want to avoid a buy-to-let product due to the very large deposit and setup fees required and poor rates. We would be able to put up somewhere around 15% deposit of the asking price without having to dip into the equity of our existing places and we would be able to service the full mortagage payments regardless of the rental situation.

So my questions are do mortgage providers have products for these kind of scenarios and should we expect to be rewarded or penalised for a partial rent scenario (you'd like to think you'd get preferential rates for carrying less risk but probably not)?

Thanks
Steve

Hi Steve,

I think you've got the general idea from the other posters...but I'll add if thats OK.

The deposit its a major issue for one.

Am I undertanding this right that the property is cut in 2 so to speak? If so, whether on one title deed or not, the surveyor surveying the property on behalf on the lender will have an opinion on this and probably say it's no mortgageable (2 kitchens as eg).

Was it originally a vic house...someone has converted it wrongly....and it's still 2 flats on one title deed? As Dave said...legal nightmare and not mortgagable in my eyes.

indieinferno

Simon_gloster wrote: »

Was it originally a vic house...someone has converted it wrongly....and it's still 2 flats on one title deed? As Dave said...legal nightmare and not mortgagable in my eyes.

It's a good question, the property has just gone on the market in the last couple of days. The area has lots of flat conversions from old Victorain streets. Looking at Zoopla I can see that the upstairs flat was bought by the owners of the downstairs flat a few years ago and now they're selling as a single lot.

Beyond that the estate agent doesn't have any further details at this stage apart from there is an issue with section 21 for a standing tennant (I know! sounds like a dream property right? :laugh: )

Sorry I can't be more specific right now but, as we've seen above, I've still got a lot to learn about this stuff. On the plus side I love to learn new things and this website seems like a great resource to do that.

I'll post up anything interesting it turns up.

Thanks
Steve