Mortgage for property let to family

pixxyco

Hi, I have a property that is currently let to my sister.
I want to remortgage if possible as I'm going onto A&L SVR of 4.99%, and they won't offer me any deals.
As the property is let to my sister does anyone now which mortgage providers (Coventry Building Society?) will give me a Buy to Let, as I understand some won't if family members are renting property.
Would another option be mortgaging it as a second home, ie holiday home with sister living there looking after it. It's on the Isle of Wight which is a holiday home hotspot.
Cheers

holly_hobby

You will need to remortgage onto a regulated buy to let product (as more than 40% is occupied by a family member) - there are various lenders whom are how happy for family arrangements (albeit an AST and the property to be self sufficient will be a requirement of theirs).

To cut to the chase - spend an hour with a whole of market borker whom will source the most suitable lender and product for your requirements.

(I assume you are already declaring rental income to HMRC via your annual SA, and have landlord blds ins in place)

Hope this helps

Holly

pixxyco

holly_hobby wrote: »

You will need to remortgage onto a regulated buy to let product (as more than 40% is occupied by a family member) - there are various lenders whom are how happy for family arrangements (albeit an AST and the property to be self sufficient will be a requirement of theirs).

To cut to the chase - spend an hour with a whole of market borker whom will source the most suitable lender and product for your requirements.

(I assume you are already declaring rental income to HMRC via your annual SA, and have landlord blds ins in place)

Hope this helps

Holly

Hi, all is HMCR declared with correct ins, I have another BTL as well. Only reason looking to remortgage is since A&L taken over by Santander they won't offer me a good mortgage deal (as they had up till now).
Coventry seem to have the best deal that I've found with no mention on restrictions on family, although a broker I spoken to wasn't so sure.
I know BM and Mortgage Works will do the mortgage, but not worth it at the rates they are charging.

Wh05apk

What's your loan to value, because to be honest 4.99% is not too bad for a BTL mortgage, if you were to remortgage, you could easily be looking at £1-2,000 in fees, which I doubt if you would actually recover.

holly_hobby

pixxyco wrote: »

Coventry seem to have the best deal that I've found with no mention on restrictions on family, although a broker I spoken to wasn't so sure.
I know BM and Mortgage Works will do the mortgage, but not worth it at the rates they are charging.

Its not so much the lender re BTLs and family tenants/regulation of lending, its actually the FSA - and because of the consequential requirements of a regulated BTL - many BTL lenders chose not to get involved.

You need to remember that a BTL mortgage is essentially semi-commerical finance - so you can't expect and won't secure a comparible residential rate - the rate reflects the exposure and risk to the lender.

As Wh05. states you need to offset the cost of effecting a BTL remortgage, against the current deal on the table.

Hope this helps

Holly

pixxyco

Hi, my loan to value is under 60%, but I only want a 80K mortgage.
I agree that 4.99% isn't bad, but A&L's rate up to today was 0.76% more than parent company Santanders (Santander put their rate up to 4.74% today), and I feel that old A&L customers who don't change, or can't will see their variable rate creep up.
There are only a few products worth switching to, mainly with Coventry, so just trying to suss out who accepts family as tenants.

holly_hobby

BTL products are provided by Godiva under Coventry BS, and the BTL application form does ask if the unit is to be let to a family member (which infers it is permitted, and the q asked in respect of my earlier comments in relation to whether the loan will be need to be written as regulated or not).

As it is already a recognised let, you will also qualify for their BTL remortgage facility (which isn't available in respect of remortgaging a main residence onto a BTL arrangement).

You may already be aware that you need an income of 25k & AST and a rental income of 125% of mge payments (based on a minimum payrate of 5%) .

So on the face of things it appears yes, but you (your broker) need to obviously contact then to verify as its intermediary access only AFAIK.

Hope this helps

Holly

pixxyco

Hi, cheers for that Holly, I'm encouraged now, just have to wait for the broker to get back to me on Tuesday. 25K bit a pain, but not a worry as will have to just put my partner on mortgage.
Cheers