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Buying & Renting

Hi Everyone,

Wondering if you can help me.

I am currently buying my flat on Right to buy and close to completion.
I am getting a RTB mortgage with some extra money on top of which initially i wanted to use for home improvements and extend the loft. However since i cant do that (flat is leasehold-roof belongs to council) then i might use that money to put down as deposit doe another house. Yes of course i am not telling lender or solicitor thats what i might do with the money as they wont authorise it. So i know that.

I have a broker whom has contacted with my lender and has said that i need 6 months before i ask for permission to let and my rate changing to a buy to let. And according to my broker i should be ok to get 2nd mortgage.

What i need help with is this:
1.If i found a house i like which i think i have, how long could it take before exchange of contracts? Bearing in mind the vendor of the house i like hasnt found a house for himself yet so obviously it will take a while.

2.Can i make an offer in the next couple of weeks and make vendor aware that i am defo buying but will take 6 months?

3. Can lender be approached and mention that i have found a house i really want and whats the likelyhood they would be ok for me to swap to BTL quicker? (bearing in mind i have a right to but mortgage)

4. If i make an offer and vendor is happy waiting, would the new lender for the 2nd mortgage want to see a BTL mortgage proof or they wouldnt be worried so long as i meet the criteria of %10 deposit?

I wouldnt have considered letting my flat but as i cant extend to the loft and we need the space think the extra money borrowed would make a good investmenet for a house as i have always dreamnt of buting a house.

Look forward to your suggesttions and advice please!

Thank you
Ella
«13

Comments

  • Guest101
    Guest101 Posts: 15,764 Forumite
    I can't advise on mortgages, but beware the perils of becoming a LL. It can be an expensive a stressful lesson.

    If you do go down that route come back for advice, goodluck
  • Guest thank you
    When it comes to renting out which i can see myself doing soon what are the pitfalls?
    Is it better to use lettinf agent or housing association
    Which provides better yield and less stress?

    Thanks
    ella
  • Guest101
    Guest101 Posts: 15,764 Forumite
    Assuming it's not a HMO, eg student house, and you rent to a couple/family type setup.

    Your main areas are gas safety annually, protecting tenants deposit, making sure all furniture us fire resistant, electrics must be safe and repairs done promptly.

    Then learn about quiet enjoyment, serving notices, don't be emotionally attached :)

    Then there's tax implications, consent to let from your lender, void periods.

    Choose letting agent carefully and your tenants even more so. There is no qualification for a letting agent, you or I could be one tomoro. There are good ones and bad, and responsibility is yours ultimately. G_M will probs be along with some great links shortly :)
  • Guest101
    Guest101 Posts: 15,764 Forumite
    Oh and best yield is managing it yourself, but only if you have a good working knowledge, LA will typically take 10% to manage the property.
  • I couldnt manage it myself as if someone dont pay my rent i would be in financial difficulty hence why would chose to go with a good lettinf agent that can guarantee me rent. Thank you ;)
  • silvercar
    silvercar Posts: 49,936 Ambassador
    Part of the Furniture 10,000 Posts Academoney Grad Name Dropper
    SO you get a mortgage on the RTB and then get extra money and use it as a deposit on a second property and get a BTL mortgage on that.

    So you won't be getting permission to let on the RTB as you will living in that property. And in any case there is usually a clause preventing you let a property bought under RTB.
    I'm a Forum Ambassador on the housing, mortgages & student money saving boards. I volunteer to help get your forum questions answered and keep the forum running smoothly. Forum Ambassadors are not moderators and don't read every post. If you spot an illegal or inappropriate post then please report it to forumteam@moneysavingexpert.com (it's not part of my role to deal with this). Any views are mine and not the official line of MoneySavingExpert.com.
  • Guest101
    Guest101 Posts: 15,764 Forumite
    UserElla wrote: »
    I couldnt manage it myself as if someone dont pay my rent i would be in financial difficulty hence why would chose to go with a good lettinf agent that can guarantee me rent. Thank you ;)

    Only a few guarantee you rent, they do it by becoming your tenant, pay you a smaller rent than you could achieve and rent your house to anyone. This can cause big problems. Houses trashed, unable to regain posession as tenants refuse to leave.
  • @silvercar - The rates would be too high on the second property as a BTL because its only 10% deposit, plus i doubt these days they can even give you a BTL on 10% deposit. I havent read of a clause in renting the RTB, from what i have read it seems to be ok. Once you buy the property can be let. I could be wrong and guess i will find out once i get all the letters for the property.

    @ Guest - i had an estate agent that deals with lettings and he said they charge 5% letting fee and guarantee rent. Some housing associations i have read they will give u a lease or 2-3 years and also give back property in the same condition as let. My flat is in great so it would be geart breaking if someone trashed it. Can i as a LL not do checks every month to stop ppl trashing the property? And i would only let out to a family/couple not students etc.
  • Guest101
    Guest101 Posts: 15,764 Forumite
    UserElla wrote: »
    I couldnt manage it myself as if someone dont pay my rent i would be in financial difficulty hence why would chose to go with a good lettinf agent that can guarantee me rent. Thank you ;)
    UserElla wrote: »
    @silvercar - The rates would be too high on the second property as a BTL because its only 10% deposit, plus i doubt these days they can even give you a BTL on 10% deposit. I havent read of a clause in renting the RTB, from what i have read it seems to be ok. Once you buy the property can be let. I could be wrong and guess i will find out once i get all the letters for the property.

    @ Guest - i had an estate agent that deals with lettings and he said they charge 5% letting fee and guarantee rent. Some housing associations i have read they will give u a lease or 2-3 years and also give back property in the same condition as let. My flat is in great so it would be geart breaking if someone trashed it. Can i as a LL not do checks every month to stop ppl trashing the property? And i would only let out to a family/couple not students etc.

    How do they guarantee the rent, is it him saying this would be easy to rent out? Unless they become your tenant and sublet, I do not know of another guaranteed scheme.

    Your flat will never return as you let us as wear and tear applies, so you would refurbish after 5-6 years anyway.

    You can ask to do inspections but your tenants can legitimately refuse access, except in case of emergency eg fire or flood. This will be their home, which is why emotional attachments are really bad in these situations.
  • marathonic
    marathonic Posts: 1,789 Forumite
    Part of the Furniture 1,000 Posts Combo Breaker
    Is this thread a joke?
    • lying to mortgage lender is fraud;
    • not many, if any, vendors will accept an offer on the provision that you can't proceed for at least 6 months. If they do, and get a better offer in the meantime, they'll just accept that
    • if a lender has a rule that they don't allow changes from a RTB to a BTL mortgage for at least 6 months, they're not going to bend this just because you 'really want' the house
    • the RTB mortgage won't even be considered for transfer to a BTL mortgage unless you have 25% equity in your current flat
    • if you know yourself that you would be in financial difficulty without payment of rent, the bank underwriter will have a good idea too - they're not stupid (anyway, why would you want to get it past them if you already know this yourself?)
    • a 5% letting fee for full management and guaranteed payment of rent - that'd be the day (NOT GOING TO HAPPEN)

    This is my only reply to this because I really do think it's a new poster setting up an account to take the p***. I don't have time to entertain it any further.
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