Do I actually NEED a buy-to-let in this situation?

florence4

I currently live in a house I own outright (without any mortgage) which is valued at approx. £110K, and I want to raise a 70% mortgage on it to release some capital for a new purchase... And then move out and let it.

I have been researching buy-to-let mortgages and discovering they are much more expensive than standard residential mortgages... And then a thought crossed my mind... Do I actually need a BTL in this situation? Could I in fact just get a standard mortgage and ask the lenders for consent to let?

Does anyone know?
Thanks in advance

ExpertAdvice

Yes, you can ask the lenders for consent to let but they are under no obligation to grant it. What will you do if you get the residential mortgage and then they refuse to give you consent? You will have to find another lender and if you still let it, that would be breach of contract!!!

Moreover, BTL are not very expensive nowadays with so much competition. You need to find the right deal.

kingstreet

Technically, it's a "let to buy" situation, so yes, you need a LTB/BTL product.

Consent to let is designed for those who need to let their residential property through a change of circumstances, not for an intentional let from the outset.

florence4

Thanks both.

dotdash79

Why don't you get a standard mortgage on the new place? that way you get a cheaper rate and your rental income is all yours (minus the tax)

Senior_Paper_Monitor

Because if she raises it on the 'soon to be' BTL the interest component (presumably all of the mortgage paydment) will be offsetable against tax for one!

The chances of a lender granting permission to let immediately after mortgaging an unencumbered property with them are slim at best (see ExpertAdvice and Kingstreet's commenst).

If you have a residential mortgage on the current property and are not releasing it, it will severely limit your ability to obtain a mortgage on a further residential property.

florence4

Yes, that's my plan dotdash The local sales market is pretty much dead here right now, but the rental market is healthy... So my plan is to get a BTL on the house I'm currently in to release capital for a deposit, then get a standard resi mortgage on new place. (I can't buy a new place without doing that because I'd have no deposit). The question I posted last night was one of those sudden "Ooh, I wonder if..." moments! I just wanted to check if I could have 2 resi mortgages rather than one BTL + 1 resi... But I see that I can't. Oh well!

ACG

With consent to let - some lenders charge a fee for doing it and/or increase the interest rate, not all do though - so it could be worth asking your broker to look at this as an option.

Also the rates you found on your BTL is pretty high. There is no reason why your broker wont be able to beat that rate by a significant amount.

hamster2013

keep it simple - get a BTL mortgage and raise your capital necessary for your residential mortgage
you increase your chances of refusal of consent depending on how fast you move out
I would like to see the face of any mortgage advisor when you approach them 6 months after taking a residential mortgage with a request for consent to let

florence4

It wouldn't even be 6 months, hamster! I was thinking more like 4 weeks! It is becoming increasingly obvious I need a BTL.

Thrugelmir

florence4 wrote: »

So my plan is to get a BTL on the house I'm currently in to release capital for a deposit, then get a standard resi mortgage on new place. (I can't buy a new place without doing that because I'd have no deposit).

Why not save for a deposit rather incurring unneccessary interest costs?