To sell or to convert to buy-to-let?

kaminari

Hi,

Hope someone can help and that this isn't too much of a long explanation.

I want to move house. I have some significant savings in long term fix
deposits, which will come to an end soon, and was wondering if I can
buy a new house where I will live and change the old house into a
buy-to-let.

My initial intention was to sell up and rent until I find and buy a
new house. I am exploring possibilities with the idea of either
completely selling up or making the existing property where I live
at now as a buy-to-let and at the same time buy a new house
where I will live.

Question 1. Is this even possible - to buy a new house where I will
live [residential mortgage] and make the house where I *was* living
into a buy-to-let [BTL Mortgage]?

Hope the above past-tense [I *was*] is indicative of the intent I
want to convey.

Are there any possible scenarios that can happen along the way,
that I need to be prepared for?

One, I can think of is:

i.e.,

I convert to buy-to-let, but end up not being able to find and buy
a house quickly enough.

Are there any others?

Question 2. Aren't the requirements for obtaining a buy-to-let
mortgage, to be holding a residential mortgage or own a house
out right?

Question 3. Would consent to let be a better option, and then
decide to sell the old house within the consent to let period
before it expires?

I am under the impression that lenders would request to take out
a buy-to-let once the consent to let expires and it might be better
to go for a buy-to-let from the start, as it would be a source of
income for pension in the future, another thing I have been meaning
to sort out, so tying to figure out how I can do so in one fell swoop.

If I were to provide my current Loan-To-Value figures, so as to better
understand my situation, would that make any difference to the
possibilities available?

Hope this makes sense.
Thanks,
kaminari

holly_hobby

Yes, you can move out of your house, pch another one and move into it as your primary residence.

From the lenders point of view, this will technically be a Let To Buy mge, all that means is that the lender will effectively ignore the mge on the let property for affordability purposes. (they may ask for sight of the AST and confirmation that the lender is aware the propery is let) although SOME lenders do include the let property in their calcs, so you may need to avoid these if it will cause an issue.

Moving to the (to be) let property ...

Consent to Let - usually for a term upto 3 yrs (then you're forced onto BTL them), in the meantime they usually leave you on the product rate you're on, but may choose to move you to SVR/BMR & 1.5% loading (as it has effectively beocme semi commerical borrowing), and this is the rate that you will revert to when any product ends, they may also charge an admin fee.

Buy to Let - max ltv as a first time landlord of 75% , and there will obv be conveyencing and product/admin fees (inc an exit fee from your current lender). Owning a current property with mge with meet the criteria of BTL lenders, with confirmation that you will be moving into your own alternative primary residence.

You may want to utilise a mge broker to source your new residential mge, and also a BTL if you elect to pursue this instead of CTL.

Hope this helps

Holly

Yorkie1

Have you looked into all that being a LL entails?
http://forums.moneysavingexpert.com/showpost.php?p=41160642&postcount=12

Would you have the finances to withstand double mortgage payments if the tenant stopped paying or for void periods?

kaminari

Many thanks Holly and Yorkie1

I got CTL but I may have made a mistake in paying my savings into
the mortgage before I made the application for CTL because the
advise I was reading whilst researching was that it would be best
to pay as much of the mortgage with savings as I could and have
about 7/9 years left to pay off the remainder.

So would a Let to Buy/Buy to Let still be the best way forward?

What about the tax implications of doing this?

I think I can understand the CGT of the 36 months time-frame
period and why mortgage lenders give 3 years max for CGT to force
people to move to BTL or sell up and pay off the mortgage.

Would it be best to get a repayment BTL or an interest only BTL?
- I am not clear if all BTL are interest only or if some BTL contain
a repayment part.

Sorry for the newbie questions.

Hope you can help out again!
Thanks,
kaminari

holly_hobby

I really think you need to sit down with a broker, as what would be relevant advice, will depend upon several personal factors, which obviously won't be discussed here.

Hope this helps

Holly

amnblog

Get some advice from a competent mortgage broker.

Otherwise there are a dozen ways to shoot yourself in the foot in this scenario.