Buy to let mortgage query.

dimbo61

Clare,
I would start by speaking to your current lender about " Consent to let" before changing onto a BTL mortgage with all the costs involved

superclare

Sorry for the delay in replying, I hadn't thought anyone else would reply but thank you.

Would someone mind explaining the sense test please. When I move in with my partner I will have bank accounts, credit card and mobile phone account registered there and it will be my only address. I could also get utility bills in my name if there is going to be a problem.

I am considering getting consent to let but I was concerned that when I tell them the truth that I am not planning on moving back they might say no. Also i thought that consent to let was only short term for a few years and if all goes well I could still need it for as long as 17 years which is when my mortgage is due to finish, do you think that might be a problem?

Thank you

holly_hobby

Yes, bank accounts, voters roll, utiliity bills all prove residency re any possible stress test that may be implemented.

Moving to CTL ...

You don't have to fully commit and delcare to the lender that you will not moving back there from outset, because lets face it anything can happen to change this i.e - you may move in with your partner and have to move back home because you can't cope with his snoring !!!!! What I'm saying is keep your options and doors open where possible .... and if asked, keep the option open that you may move back there ..... if you don't well thats one of those things ... !

CTL is only a temporary arrangement, typically around 3 yrs (but may be less depending upon the lender), at which point they will ask if you intend to re-habit the property, if not, they will switch you to either a specific BTL mge from their range OR if they don't have a BTL portfolio to SVR with a typical loading of circa 1.5% - OR if they can't offer either, they will advise you that you will need to source an alternative BTL lender (which of course may already be your intention if you wish to secure a more attractive rate than any offered with your current lender).

CTL in my opinion, would be the best route forward at this point in time, given the saving on mge fees against a new BTL mge, and the additional CGT reliefs and allowances that the property (as your previous primary residence) will attract on any gain made on sale. Which briefly equates to full relief when it was you primary residence under primiary residence relief, the entire last 36 mths of ownership (regardless of its occupation), lettings relief and of course any annual losses plus your unused annual personal CGT allowance.

If you instead sell up and then subsequenlty pch a property to let (and never reside in it), your CGT relief on any gain on disposal is restirected to just your annual unused CGT allowance and any losses - so you can see there is HUGE difference between the 2 options, which I have already touched on in my earlier posts, and I believe a reason to strongly consider CTL of your current property, before its sale and your subsequent purchase of a specific BTL property. (assuming that the 2nd doesn't later become your main residence pre sale).

As always, tax advice should always be verified by your own independent and qualified adviser.

Hope this helps ...

Holly x