FTB getting a BTL mortgage - good idea?

Yorkie1

billymadbiker wrote: »

So what's the rules on renting out a place with a normal mortgage on it then?
We were not thinking of running it as a rental business/source of income, the idea was for it to cover its own costs and be a 'free' retirement home for us in 25yrs time.
It would also be our only mortgage so could it not just be secured on the property if we had a 25%deposit?

If you obtain a residential mortgage with the intention of letting it out, that is mortgage fraud.

If you are living in your property and subsequently decide to let it out (which doesn't actually fit your circumstances but might help others), you must ask your residential lender for consent to let. They are not obliged to agree - they may charge an extra fee or raise the interest rate. You'd also need a jolly good reason to explain why you're asking for it.

They will generally not countenance an application for at least 6 months after you buy the property. If you ask sooner, it will be pretty obvious that you intended to let it out from day 1.

Do not let it out without permission. This is a breach of the T&Cs and could lead to the lender asking you to repay the mortgage. A sensible tenant will ask for proof that you have this permission and lenders have increasing means at their disposal to find out that you're doing this.

CTL is not an indefinite solution even if granted, so there is no way you'd be able to use it for the whole 25 years - probably 3 at absolute tops.

You are completely wrong not to treat this as a business. It IS a business and if you don't treat it as such, the impact on you and/or your tenants could be significant.

You appear intent to go into this irrespective of the legality, rules and consequences.

billymadbiker

We are not 'intent' on anything, certainly not to the stage of breaking any rules etc.

It's one of a number of options but we do need to get on and do something.
We are currently saving about £400pm so need to make it work for us some how.
If we keep renting this savings pot would give us about £150k in 25yrs time. Some how lut of that we will be needing somewhere to live plus enough change for any living costs above our state pensions

Thrugelmir

£7,500 for rent for both home and place of work seems cheap, considering you say the property is worth £250k. I would continue to rent whilst saving for a while longer.