Buy to rent but live there myself... Possible?

rharper83

Hi everyone,

I've lurked for ages, taking in information, but never actually posting on this board (as I've never really needed to!). However, the time has come where I'm hoping someone could advise!

I'm looking to purchase my parents house (for various reasons - they currently own it but have a mortgage on it), with them still living there, but still living there myself now for the short term at least (~ a few years). They'd be effectively paying the amount of the mortgage to me each month, so it wouldn't be costing me anything, and in the eventuality that anything happens to either of them I'd be capable of covering the cost of the mortgage myself.

However, what I don't know is what kind of mortgage should I be going for? A buy to let, or a standard mortgage?

Secondly, what steps should I go through to get a mortgage? Valuation first, then straight to mortgage application?

Finally, should I speak to a mortgage broker or an IFA?

Sorry for being so clueless!

Hope someone can give me some guidance.

Richard.

djm1972

Hi Richard,

You can't get a buy-to-let mortgage if you are going to be resident in the property yourself. Lenders are strict about this - your application would not be processed unless you can provide an address where you will be living after completion.

The reason for this is simple a buy-to-let mortgage is underwritten on the basis that an independent rental income will be servicing the payments; so if you are going to be living there yourself this would not be the case.

What you would need for the time being is a standard residential mortgage, made based on your own ability to pay (you said that you would be able to anyway if / when your parents are not able to). The fact that your parents will actually be giving you the money for the time being needn't (I don't think) come into it; but regardless you would need to declare their occupancy on the application form. You will then receive a form for them to sign saying that they don't hold any claim to title over the property - this is normal for any mortgage application where other adults are living in the house.

If you then want to let the property in the future you can remortgage onto a buy-to-let product at the time, or obtain consent (if available) to let the property under your residential mortgage terms - but this may cost money and may not even be allowed at all, so perhaps something to consider when choosing your residential product.

I'd say your situation is non-standard enough to warrant going through a mortgage advisor just to double check everything, but if you didn't want to you can always get a copy of What Mortgage? and take it from there!

HTH

Doozergirl

If you live there and can afford the repayments then a standard mortgage is for you.

With a BTL mortgage, the rent often needs to cover 130% of the mortgage repayments so you might have trouble on that front anyway.

You need to have the house valued and then go and see a whole of market mortgage broker who will be able to advise you on the best product for you and tell you exactly how much you can borrow. Mortgage broker or IFA doesn't really matter as long as your IFA sells mortgages!

rharper83

Thanks for your replies djm1972 and Doozergirl. Sorry I haven't replied sooner!

Your comments are great, and confirmed kind of what I'd thought. It's raised a couple of questions though, and I guess I hadn't given you all of the info to start with.

Firstly (again!), I presume having a residential mortgage now would affect any chance of me getting a mortgage in the short term (again up to 5 years) with my partner as my income would be tied to that?

Would I be able to change a residential mortgage to a buy to let mortgage in the future if i took one out now?

Are there any other risks that I've not even considered? Sorry, a very vague question!

I had more questions, but due to not having internet access, and not being able to post on here, I've forgotten them! I'm sure I'll post as and when I remember!

Thanks!

Richard.