Help! Buy to Let or Right To Buy

FreeBetKing

Hi All,

I have recently been accepted on a Right To Buy application on a 2 bed property which I estimate to be worth around £100k (I am awaiting official valuation). My discount should be approx £15k, so the purchase price (hopefully) should be around £85k.

I am moving to spain in the next 4-6 weeks and I am looking to purchase the property, decorate it then let it out.

I have done some quick quotes on the internet, but the majority are split between a Buy-To-Let mortgage and a Right-To-Buy... my situation seems to combine the two. What type do I need?

My other problem is that I dont have much of a deposit (if any) and the maximum LTV I have seen on the BTL mortgage is 95%. Is there a way of somehow releasing some of my discount in the deal to use as deposit and cash to "do up" the property?

Any advice would be appreciated.

Thanks
Mark

seven-day-weekend

I would make sure before you do any of this that there is no clause that says you are not allowed to rent out a RTB property for a certain time. I have a feeling that part of the terms of RTB are that you must live in the property yourself both before and for a certain time after the transaction.

I doubt very much you will be able to 'release' the discount. In effect, they would then have paid it to you twice!

Can't help with the mortgage I'm afraid.

FreeBetKing

Cheers for the advice.

I have not seen any term which suggest that I cant rent it out, but I know that I cannot sell it within 5 years, otherwise I will have to forefit the discount back to them.

If anyone else has any experience of this I would appreciate you correcting me if I am wrong!

silvercar

right-to-buy mortgages are residential, you need a buy-to-let if you intend renting it out. Or you could go for a RTB (which is really a fancy way of describing an ordinary residential mortgage) and check that your lender will give you consent to lease when the time comes.

FreeBetKing

Cheers Silver.

Anyone know if I could get a mortgage based on the value of the property, e.g. 100k and use the spare cash for deposit and repairs etc?

silvercar

FreeBetKing wrote: »

Cheers Silver.

Anyone know if I could get a mortgage based on the value of the property, e.g. 100k and use the spare cash for deposit and repairs etc?

I'm sure its possible, though the interest rate may be on the high side. Post on the mortgage board for the experts advice.

You could always remortgage after a few months based on the value not on the price you are paying.

moneysavinmonkey

Whilst not illegal, what you are intending could be considered morally dubious to say the least.

You may want to consider whether you really want to take this course of action.

Understandably many local authorities are attempting to prevent council housing stock being used for personal profit in this way... I would advise you look into what the current rules are and make sure that there are no plans to change/or challenge them.

http://society.guardian.co.uk/housing/story/0,,573045,00.html

FreeBetKing

Hi MoneyMonkey.

Not sure what you mean by morally dubious?

I have lived in this property for almost 10 years, paying full rent to the Council before being taken over by a housing assoc. 3 yrs ago. At rent of approx £300-£350 per month (bargain I know) I estimate that I have paid approx £4500 per year rent, totalling £45k.

The company that I work for announced last month that they are relocating to Gibraltar, I have little option but to go with them.

If I do not buy, I would be losing my home of 10 years, on which I have spent thousands on improvements, from Central Heating to New Bathroom/Kitchen.

I dont know how long I will be staying in Spain, It could be 1 year, it could be 10 years, but either way I dont want to lose my home in the UK. This is not "a way to make money" - I am just securing my home of 10 years.

I came on here for advice on renting my property... if anyone could advise on my original questions it would be appreciated. Comments on "Morals" are not required.

lowis

I got my mortgage with the Nationwide - just a regular mortgage, I didn't have to get a special RTB one from a 'specialist' lender (they are usually rip-offs anyway).

The Nationwide counted my discount as the deposit so my LTV was around 70%.

There are no clauses about renting my property out - I just can't sell it for 3 years - unless I want to forfeit the discount.

moneysavinmonkey

FreeBetKing wrote: »

Hi MoneyMonkey.

Not sure what you mean by morally dubious?

I have lived in this property for almost 10 years, paying full rent to the Council in the UK. This is not "a way to make money" - I am just securing my home of 10 years.

I came on here for advice on renting my property... if anyone could advise on my original questions it would be appreciated. Comments on "Morals" are not required.

Apologies if you have taken offence to my post. I stated only that it could be considered morally dubious. From your originally post it was not clear that you had lived in the property for any length of time.. in fact i interpreted your language to mean quite the opposite - apparently wrongly thinking that someone would not refer to their home of many years simply as 'a two bed property'.

in any case i understand your motives much better now, but would still advise you carefully check the local rules regarding RTB in your area and advise the housing association of your plans - perhaps you could even rent it back to them!