To Sell or To Let?? Help Would Be Appreciated

MaryJane

Hi All

First post so go easy on me please :rotfl:

Basically, I am currently in the process of taking on a second mortgage, the intention was to gain consent to let on the first property with the view to selling in a couple of years. My problem is that after researching this more thoroughly (I now realise I should have done this first ) its apparent that my lenders (Northern Rock/ NRAM) conditions state that the property has to have a LTV of 75%....which I don't have as it was a 100% mortgage

What would you're advice be? To either:

Switch to another lender whose LTV may be higher (I could put 5-10% deposit down)

or

Sell the property

You're advice would be much appreciated, thanks

jayphe

You'll do well to find a mortgage that will allow the plan to work even with a 10% contribution, if you're going into it knowing that it's for rental you should probably be looking at BTL products rather than residential. If you go residential then check how quickly you can apply for consent to let, it's physically possible to let without consent, but opens risks for both yourself and the tenant that are best avoided.

If you can get a mortgage on terms that will work, then a quick check to see if the let will generate cash after you've paid mortgage and set aside costs for management, insurance, fees, voids and maintenance (plus opportunity cost of the tied up capital if you're doing it properly). Unless you have a very strong opinion on the direction of capital values in the short term it should at least pay you a little cash to compensate you for the risk you're taking. I say short term because if you sold this there is nothing stopping you buying somewhere else as a BTL in 6/12/24 months.

Finally, I imagine it's much harder being a landlord when you have emotional attachment to the property, I have no first-hand experience, but I know I'd end up treating a house I'd lived in differently to somewhere that's an investment only and end up spending too much on maintenance and getting too stressed if things didn't go smoothly.

Good luck!

Dave_Ham

No lender will like a consent to let application 1 month after you have just remortgaged as a residential customer.

Your question should unfortunately be, should you sell or should you stay.

Getting a 2nd mortgage will be incredibly difficult (depending upon income) when any new lender sees the NRAM financial commitment..

Sorry not better news - good luck

MaryJane

Thanks for you're replies

The purchase of the second property is going through at the moment, hopefully just a couple of weeks away from completion so I'm not really too concerned about that, I just would have liked to of hung on to the first property while I could.

Somebody had posted on here a message that showed lenders and the LTV that was necessary, but I can't find it

I have somebody thats very keen to rent the first property and financially I could afford both mortgages should there be a problem, was hoping to take the consent to let route as I'd hoped that in a couple of years I'd at least break even after solicitors costs etc when selling the house. Just really unsure of what to do.....

Thanks for youre help

Dave_Ham

You either earn very well (and able to afford both mortgages) or the broker has told the new mortgage company that you have consent to let already which potentially is a dangerous game.

So your question may well change to do you sell or rent the place out and not tell NRAM?

I understand your ongoing dilemma, however my personal opinion is to either sell or run the risk as not sure you will be able to achieve a new mortgage and then straight to consent to let with any lender...

DannyboyMidlands

I'd stop taking punts on the property market if I were you. Who says prices will not be lower in a couple of years time?

Sell the place.

MaryJane

My intention is not to 'take punts' on the property market but had hoped to keep this house on and make payments on the mortgage for the next 18 years until it is paid off (sooner if I make overpayments as planned) which would make a nice 'university fund' for my child (if he goes that is!) Its in an area that houses rent very easily, so letting it did not concern me until I looked into NRAMs terms for letting.

I don't earn mega bucks but earn enough to pay both mortgages if need be so that with a 25% deposit enabled me to take on a 2nd mortgage.

Thanks again for your help, your advice is appreciated

DannyboyMidlands

But you said you were planning to sell it in a couple of years?

MaryJane

Yes thats right if the price was right, either that or switching to a BTL if after a couple of years of overpaying on the mortgage there is enough equity (cheap house compared to the average house). Trying to figure out my options, although after a lot of reading up it seems I'm left with very few

Either way the plan was to be able to have a bit of money to make things a bit easier in the future

Thanks again

DannyboyMidlands

Still sounds like a bit of a gamble to me, sorry. So many variables and lenders current and future whims that you have no control over.

If not a gamble then a massive pain in the a$$. I'd keep things simple and sell it.

AmyRob

Hello. We have got consent to let on our current house and due to falling property prices we only have about 5% equity in it. Mortgage company were fine about giving it but have put a 1% premium on the residential rate we were paying.
We have just bought another house. Declared the first one with the consent to let and since we have official consent to let in place (and we had to prove that by showing docs) it was classed as a debt if you like rather than a second home. When assessing affordability they took off about 25% of the rental income as they said this would be needed for maintance and upkeep etc.
There were no problems for us but I was told by a broker that the only people who would consider such a situation were santander (which suited us as they had the deal we wanted anyway!)
Just wanted to say that all is not lost - speak to your current company and see what they actually say. We couldn't change product as equity was so low but they were happy for us to shift to consent to let.
We too may sell in a few years or keep as investment depending on market prices....