Buy to Let Mortgages

JoeK_3

That's a different slant on things.

Like I've said in other threads, it's nice to have a balanced view.

JoeK

bon_3

Property A is own domestic property with standard mortgage
Property B is new build on same land (unoccupied). We would live in propertyB at sale of propertyA
Property C would be buy to let if viable
Other question is (bearing in mind information below) : Would I stand a better chance of securing buy to let mortgage than a standard mortgage in my circumstances? I'm sorry if I'm vague but this vis all a steep learning curve for me.
This was original post before coming up with the idea:
We borrowed £65,000 so we could build a new property on land with the property we live in. It is secured on the property and a charge is registered at the land registry. Both properties are registered on the same title for the time being. We also have two unsecured loan adding to £24,000 and credit cards to the value of £6,000 and ***** mortgage £58,000. I have received letter from ***** who have stated that they would have offered mortgage on new build if we had used a different 10 year warranty on house build(nothing wrong with warranty they just don't recognise it). Otherwise, at day of completion of sale(or day before) we were given the condition that we paid these debts. The original bungalow would sell for £115,000 to £125,000 (£115,000 being modest and £125,000 our cap(stamp duty)). Ideally we would have remortgaged with *****( mortgage being on new build as we move in) and pay the remaining £95,000 using proceeds from sale (this accounts for estate agent and solicitors fees). This would leave a surplus of at least £20,000 for us to further improve on the new property. The way the mortgage companies see it doesn't take this logic into account which is why I thought it might be easier to raise enough money to pay secured loans when we sell original bungalow. This would mean that we might be able to then raise a mortgage on the new new property subject to us paying the £30,000 we would have in unsecured loans. Haven't been successful in applying for unsecured loans or mortgage from one of the companies that accept the 10 year warranty. If I sell original bungalow I have to settle secured loans legally.


I'm worn out, at the end of my tether so sorry if unclear. I want to move out of original property and in to new build. The original property should fetch between £120,000 and £125,000. The new build has been valued at £135,000 but this is definitely under; It would fetch between £145,000 and £150,000. Selling both properties would have grave tax implications which would put me in a position worse than before new build. The 10 year warranty is with SELF BUILD ZONE.


I got to this point in the following way:
A succession of bad mortgages and low income meant that we borrowed to keep house. This got to a point where we either do something or loose property. Estate agent suggested we could build a house. Eventually, despite a massive battle with planning got permission. Low income etc. meant that the usual lenders wouldn't entertain and had to take out another unsecured loan to cover mortgage etc. in the meantime. Got secured loan at high rate through a broker. Hoped for the best and assumed that mortgage company***** would transfer the mortgage on the sale of the original bungalow as it was supposed to be portable. They admit I was misinformed and have refunded valuation fee and waved early repayment penalty

bon_3

Sorry Mistyped In 6) . We Would Move Into Property B Not Property C

owner

Some nice point's brought out here but as most BTL landlords have stripped out the equity from the properties to finance other purchases, the equity is not now there.

Didn't I read somewhere recently that the average LTV for BTL's is less than 50% though ?

JoeK_3

bon wrote: »

Property A is own domestic property with standard mortgage

No capital gains tax to pay on the sale of property A.

bon wrote: »

Property B is new build on same land (unoccupied). We would live in propertyB at sale of propertyA

OK so far!

bon wrote: »

Property C would be buy to let if viable

Where is this property and where would you get the deposit of 15% from?

bon wrote: »

Other question is (bearing in mind information below) : Would I stand a better chance of securing buy to let mortgage than a standard mortgage in my circumstances?

I assume you mean on property C?

bon wrote: »

I'm sorry if I'm vague but this vis all a steep learning curve for me.

It's not the you're vague, it's that it's all jumbled up!

bon wrote: »

This was original post before coming up with the idea:

What idea?

bon wrote: »

We borrowed £65,000 so we could build a new property on land with the property we live in. It is secured on the property and a charge is registered at the land registry. Both properties are registered on the same title for the time being. We also have two unsecured loan adding to £24,000 and credit cards to the value of £6,000 and ***** mortgage £58,000.

Are both these properties up and built?

bon wrote: »

I have received letter from ***** who have stated that they would have offered mortgage on new build if we had used a different 10 year warranty on house build(nothing wrong with warranty they just don't recognise it).

Not NHBC I assume?

bon wrote: »

Otherwise, at day of completion of sale(or day before) we were given the condition that we paid these debts. The original bungalow would sell for £115,000 to £125,000 (£115,000 being modest and £125,000 our cap(stamp duty)).

Has the original bungalow been sold?

bon wrote: »

Ideally we would have remortgaged with *****( mortgage being on new build as we move in) and pay the remaining £95,000 using proceeds from sale (this accounts for estate agent and solicitors fees). This would leave a surplus of at least £20,000 for us to further improve on the new property. The way the mortgage companies see it doesn't take this logic into account which is why I thought it might be easier to raise enough money to pay secured loans when we sell original bungalow. This would mean that we might be able to then raise a mortgage on the new new property subject to us paying the £30,000 we would have in unsecured loans. Haven't been successful in applying for unsecured loans or mortgage from one of the companies that accept the 10 year warranty. If I sell original bungalow I have to settle secured loans legally.

Ramblings!

bon wrote: »

I'm worn out, at the end of my tether so sorry if unclear. I want to move out of original property and in to new build. The original property should fetch between £120,000 and £125,000. The new build has been valued at £135,000 but this is definitely under; It would fetch between £145,000 and £150,000. Selling both properties would have grave tax implications which would put me in a position worse than before new build. The 10 year warranty is with SELF BUILD ZONE.

Your'e worn out!!!! I'm bl***y knackered. lol

bon wrote: »

I got to this point in the following way:
A succession of bad mortgages and low income meant that we borrowed to keep house. This got to a point where we either do something or loose property. Estate agent suggested we could build a house. Eventually, despite a massive battle with planning got permission. Low income etc. meant that the usual lenders wouldn't entertain and had to take out another unsecured loan to cover mortgage etc. in the meantime. Got secured loan at high rate through a broker. Hoped for the best and assumed that mortgage company***** would transfer the mortgage on the sale of the original bungalow as it was supposed to be portable. They admit I was misinformed and have refunded valuation fee and waved early repayment penalty

What's the bl**dy question????

JoeK

bon_3

I would have to make an offer on property C. There are quite a few in the area at the moment.
Deposit would come from proceeds of sale of PROPERTY A
I mean buy to let a new property(PROPERTY C) because my SELF BUILD ZONE 10 year warranty limits the number of lenders that I can approach in order to raise mortgage on new build PROPERTY B and none of the lenders who accept the warranty will entertain because of financial commitments even though we wouldn't have these commitments when we sell PROPERTY A.
This was my idea (my personal revelation) as a lay person in this area so that I could resolve my problem. some dialogue began in another post which is where "the ramblings" came from.
PROPERTY A is on the market.
All the properties involved are built.
The question iiiis: Do you think it would be viable and sensible and benificial etc. to introduce a PROPERTY C by way of buy to let mortgage from a lenders perspective, if I buy PropertyC as part of the chain in selling PROPERTY A?
I would move in to property B and own that property outright.

SallyD

Okay guys and gals, you have worn me out reading this thread........I posted an eqnuiry on the Mortgages thread but now I am going to sound you out.

55 now, due to retire at 61 and intend doing so. Looking to buy for the first time. I intend moving up North, Huddersfield way. Can buy a reasonable place for maximum £120,000 realistically £100,000 should get me a small terrace. Now, I live in North London and no way can I buy my Council house so that is definitely not an option.

Now, I was intending to put 50% down and get a flexible mortgage for the balance over say 10 years. Now I was hoping to rent out until I was ready to move up but to be honest the rents in the area I am hoping to go too probably wont make more than £300 per month and then I suppose Buy to Let mortgages come into it.

Reading bits and bobs on the various threads strikes me Buy to Let mortgages are more of a business deal whereas I wanted simplicity and as it strikes me the novely of Buy to Let is wearing off should I whack as much cash on the property maybe buy for what I can pay and maybe just take a personal loan to make up the shortfall and do 6 month rentals as and when to get a little cash back - or would even short lets make me a "business" or could I not have a "lodger"

I do feel as I am rambling on a bit but would be very interested to read your opinions.

silvercar

Bon, you seem to be in enough difficulty with properties A and B without buying another property!

It seems you can't sell one or other because of either CGT or charges on the property, I would either employ a competent solicitor to sort the mess out or accept you can't sell them for now.

It seems that you can't remortgage, either because of charges on the property or because the build certificate isn't approved so forget that idea.

How about living in one and renting the other out? You may be able do it under the government rent-a-room scheme to avoid tax as they are currently registered as one property. If not, it would at least bring in some income.

bon_3

I appreciate what you are saying and I will look at scheme but renting out A would not help us to maintain payments. Property C might work if a lender 'Buy to let' would be more likely take on the £58,000 mortgage subject to other debts being settled or whether I would be wasting my time.
I could sell A if I could raise a mortgage. Its not a question of whether it's complicated, it's a question of whether it's feasible in peoples opinion and what suggestions they might have. Afterall, moneyexpert.com comes up with all sorts of out of the ordinary ways to deal with finance problems, organisations etc. Thats what i thought the website was for. Many buisiness people juggle many things to there advantage. this site is here to help the have nots get on an equal footing So I have to find away to break the chains giving as little as possible away to those without conscience. Prolonging these debts by holding onto property A and B will only serve to prolong the inevitable. If property C was a reasonable option then maybe I would be able to eat and sleep at night. If not, then back to the drawing board. These are my thoughts. Please comment.

silvercar

Buying another property doesn't really help as you will be borrowing the purchase price to do it so increasing your borrowing to do it, so won't be freeing up money.

Selling property A isn't an option unless you can get a mortgage on B at the same time (as per your agreement). See a good broker to find out if it is possible that there is a lender who will accept your finances AND accept this self build certificate.

Failing that, the next option is to sell property B. This means a capital gains tax, based on the selling price less building costs and possibly land value, I reckon this would be of the order of £15k if you are a basic rate payer. Not payable until January 2009 so you would have some breathing space.