Help with btl please.

hateshousework

OK, this is my 1st post so please be gentle lol

My 18yr old daughter has been left £15k and we have the chance to buy a small cottage locally for £40k, with a tenant lined up (he is actually the nephew of the owner and I work with him, great guy)

The most we could expect in rent is £360pm,and I think it needs max £10k spending on it, probably more like £7k

My house is worth £120k and I have a £50k (interest only) mortgage with Skipton that ends Jan 2014. The endowment meant to pay that off with make roughly £40k

I have a couple of questions, in general would I be better using the residential mortgage by increasing it another 15 years and upping it to £85k, using that £35k and the £15k cash or should I get a totally seperate btl interest only mortgage.

Ideally my daughter would have the btl mortgage in her name but I don't think that would be possible as she is still at college and no income. I do recieve tax credits and child tax credits and I have a feeling any rent even though it was my daughters property would decrease them, am I right.

Thanks for any help/advice offered

ACG

If your buying the property for cash (ie £40k from your house and £15k of your daughters inheritence) then it can be in your daughters name.

The mortgage would be secured against your property in your name so it would be based on your income.

Does that make sense? Im not sure if it comes across in writing or not.

As for which is best, we cant tell you which is "best" as thats classed as advice and we cant give actual advice on these forums - just pointers and help etc.

One way to do it would be to search for BTL and residential mortgage and do the maths.

Alternatively for something like this you might be best speaking to a mortgage advisor.

You dont need to actually answer this, its more something to think about if you havnt already but why is a property being sold for a third of what its worth - even if it need £10k spending on it. I would be getting a full structural survey done on it just to make sure.

hateshousework

Sorry, I was unclear it is MY house that is worth £120k, the btl is worth approx £55k, the old lady next door owns it, she offered it to her nephew for £40k but he isn't in a position to buy atm, but she is willing to let me have it for the same price if he is the tenant.

Good news about it being possible to go in my daughters name, will have to check with tax credit helpline on Monday how that would alter things. They did say if it went into her account and she paid the mortgage it would't alter my credit but I have been advised she can't pay a btl as she would have no legal connection.

ACG

You are allowed to remortgage your property and gift/lend that money to your daughter. She would then be able to purchase it outright.

That means you would just be doing a residential re-mortgage on your existing property.

*just to note, im not advising you to do that. Its just an option that may be open to you subject to underwriting etc with whichever lender you choose to go with.

hateshousework

Don't worry, I will take it all as general chit chat

And in the vein of "chit chat" do you think that would be better than a btl? sounds like it might be.

Would some mortgage companies take wftc as part of my income?

ACG

Some will yes.

Doing a residential would usually be cheaper - as to whether thats a better option, ill let you decide :P

hateshousework

Argg, I can't even decide whether to make a coffee or tea :eek:

ACG

Once youve decided you then need to decide - earl grey, comomile, morning tea or one of the many that twinings do, alternatively you have mocha, cappucino, espresso, latte etc etc. Go for bovril...less decisions to make then.

hateshousework

Hehe, I live in North Wales, we do *tea* or *coffee* none of your fancy english stuff.

ACG

Best way to do it!
Went in starbucks today and asked for a coffee, they said what type...i said just a normal coffee, she shouted the order to the person making them. Apparantly a normal coffee is now an americano???

dimbo61

So your daughter is only 18 and not working ( at college and maybe university ??? ) £15K would pay alot of costs at uni for 3 years.
So you need to go to your lender and ask to borrow another £35K with your home as security but you want to gift this money to your daughter to buy a BTL property.
You have an interest only mortgage at the moment but if you borrowed more I bet the skipton would want you to change to a repayment mortgage.
Good Luck