First and second home Dilema

thomson_adam

Right boys/girls
Here is my story so far ..... I seen a reposed prpperty last year ( November ) and wanted it for letting purposes , as it was a repossession I had only a month to exchange contracts , ad in the fact the house was below £50k and I was a first time buyer my mortage options were limited . I managed to get a mortage but not a buy to let.

I've had the house just over two months now ( still renovating ) so here is my Dilema . I have been offered another prpperty at a good price which id also like to rent . Again this house is sub £50k . How do I go about getting a second mortage and should I inform my first mortage company that I'm going to rent it out ?

I do understand that there are regulations to doing things but I hear all the time how people are bending the rules

bigadaj

Go on, it's your life but don't whine when you get caught out.

holly_hobby

The 2nd property's pch price is probably too low for most BTL lenders, and your mge history is too recent to meet the existing mge requirements most have.

If you let your current property without consent to let (which I doubt you will get at this early juncture in ownership), then you are in breach of your mge and buildings ins t&cs, a result of which means that the lender can demand immediate repayment, and if the house is burned down, you've no valid insurance and you're on your own.

Take things a step at a time, renovate what you have, and then contemplate your options.

Of course you may elect to live dangerously, which is of course your perogative !

Hope this helps

Holly

Thrugelmir

thomson_adam wrote: »

I do understand that there are regulations to doing things but I hear all the time how people are bending the rules

In what way?

Would you consider driving your car untaxed , with no Mot and no insurance. Or is the risk too great?

GMS

What Loan to Value is the mortgage on the property you are currently letting?

What value for the prposed new one? How sub 50k? What deposit do you have? What rental per month? What is your income?

thomson_adam

How often do the mortgage company's find out you are renting ? would it be worth giving them a call once lts renovated and telling them I may be going to rent it ?

I paid £45k for the house , after renovation I believe it will be valued at £60-£65 k . My mortage is only for £35k so I should have some equity in it . The reason they are so cheap is dude to the fact they are utter messes , I mean the one I'm doing at the minute the floor had collapsed to give you an idea .

I plan on getting landlords insurance , and declaring the income . I just couldn't get a buy to let mortage on a property of such little value . I struggled to get an actual mortage .

The house is not finished so I'm currently not letting but the local area letting prices are between £340-£410 for simlar places .

thomson_adam

As for the second property I've been offered the situation is that my friend has come into possession of it due to a death in his family . We have come and an arrangemt with regards to the deposit as most of my money is tied up in the first house .

GMS

thomson_adam wrote: »

As for the second property I've been offered the situation is that my friend has come into possession of it due to a death in his family . We have come and an arrangemt with regards to the deposit as most of my money is tied up in the first house .

What arrangement for the deposit?

Thrugelmir

thomson_adam wrote: »

I plan on getting landlords insurance ,

Insurance is technically void if lenders permission is not sought and given.

Thrugelmir

thomson_adam wrote: »

I paid £45k for the house , after renovation I believe it will be valued at £60-£65 k .

Why not sell it to buy the next?

holly_hobby

You are looking at an absolute minimum of 6 mths ownership for the lender to even begin to consider granting CTL - and it won't be given if they feel that you actually purchased with the intention to let, essentially using the resi mge & subsequent ctl application as essentially a back door to securing BTL finance.

If CTL is refused and once it is refurbed wanted to remortgage it onto a BTL mge (max 75% for a first time landlord), then the lender will ordinarilly want to know that you will simultaneously be purchasing your own primary residence (ie not remaining resident in the let property).

Whats important for you to note re this 2nd house offer, is that from a lenders point of view, there can't be any arrangement for a deposit on a property being purchased - lenders (except in the case of family discounted purchases and RTBs), want a monetary deposit exchanged - as Vendor gifted deposits are no longer permitted.

Hope this helps

Holly