Remortgaging property I own but don't currently live in

oldmonkey

Could I pick the collective brains of all the Money Saving Experts here please?

My brother and I bought our parents’ house from them 14 years ago, for a considerably reduced price of £30k, just the value of their outstanding mortgage, through the Abbey National. The only condition with this was that they could live there rent free for as long as they liked – both my brother and myself lived there at the time but subsequently moved elsewhere. The Abbey National mortgage was a 25 year endowment (which failed miserably, reaching less than £10k after 14 years), which we recently converted to a repayment mortgage over the same term (obviously with Santander now), thus 11 years remaining.

We are both living in rented accommodation in different parts of the country, and would both like to purchase properties with our respective partners. To raise the deposits necessary (£30k for me and £50k for my brother) we would like to remortgage the house we jointly own, we are looking for 61.1% LTV only given the current property value of £180k.

Could you advise please as to which would be the best option for us in terms of remortgaging? Which banks/building societies would be the best bet for our requirements? Santander are reluctant to proceed, according to their rather chaotic and inexperienced mortgage adviser, as neither of us live at the property. They are unable to compute that there is no rental income from the property nor do we incur any costs besides the actual mortgage amount – my mother pays any bills arising from the property, as she has done since 1999. Is the adviser just getting it wrong?


Any advice gratefully received!

ACG

Their "advisor" is right. What you need is a regulated buy to let i think - something abbey do not do.

You will probably need a broker for this to be honest as its far from straightforward - although if you strip it down to bare bones its not that complicated, you just need an understanding lender.

holly_hobby

Firstly with respect to the remortgage, you'll understand that your income must be sufficient to service both the reqd remortgage and your own rent & other committments.

This will remain unchanged, even if you secure a regulated BTL remortgage, which is assessed on the applicants earned income (as oppossed to any rental income, which you don't receve anyway), due to its regulated status. (FYI - any BTL would be on a regulated basis as more than 40% of the property is occupied by family).

Moving on, lets say you do manage to sort the remortgage out and secure the finance you require, you now want to use this to pch your own home with a mortgage.

Again, there are 2 main issues to manage with this.

As a 2nd property (which it will be classed as, even though you don't reside in the existing dwelling) you are looking at a max ltv circa 85%.

Your income will need to be sufficient to service both the mge (where Mum and Dad live), and your own new mortgage and commitments.

If you believe your income can suffice, then I would engage a broker to assist with this.

Hope this helps

Holly

Dave_the_Ginger_Cat

You may be better by keeping your folks' mortgage as is, raising a small deposit yourselves and buying at a higher loan to value on your own house. The rates you;ll get on the BTL willl be worse than consumer.

I would just counsel doing the maths on the total repayments, as you may find you incur a bunch of costs for a marginal gain

oldmonkey

Thanks all, no problems on the income servicing both the original mortgage and any new mortgage and commitments - the original mortgage was only for £30k and is £291 between us. My wife has up to £40k to put towards any deposit on a new property as well as whatever I can get from a regulated BTL remortgage on my share, we're not looking at anything that would stretch us or beyond our means. Likewise with my brother, his situation is almost identical in terms of available deposit.

I'll find a local broker I think! Many thanks.

holly_hobby wrote: »

Firstly with respect to the remortgage, you'll understand that your income must be sufficient to service both the reqd remortgage and your own rent & other committments.

This will remain unchanged, even if you secure a regulated BTL remortgage, which is assessed on the applicants earned income (as oppossed to any rental income, which you don't receve anyway), due to its regulated status. (FYI - any BTL would be on a regulated basis as more than 40% of the property is occupied by family).

Moving on, lets say you do manage to sort the remortgage out and secure the finance you require, you now want to use this to pch your own home with a mortgage.

Again, there are 2 main issues to manage with this.

As a 2nd property (which it will be classed as, even though you don't reside in the existing dwelling) you are looking at a max ltv circa 85%.

Your income will need to be sufficient to service both the mge (where Mum and Dad live), and your own new mortgage and commitments.

If you believe your income can suffice, then I would engage a broker to assist with this.

Hope this helps

Holly