buy to let or consent to let?

chrishar

Hi there,

I am hoping to let my flat out and buy another place.

I already know a couple of people who would rent a room each, and I'd like to see how it goes for 6 months - a year.

I don't want to go on buy-to-let as they are all 2+ years and I don't want to be tied in, in case I decide to sell the property after the initial 6 months.

Is it possible to get consent to let, when I am buying another property? Is this an acceptable reason, that I want to try it first before going into a new fixed deal?

Thanks, Chrishar

acs_2

You cant change your mortgage to a buy to let if its the only property that you own.

What you need to do is ring your mortgage lender and look at a 'consent to let', which keeps your mortgage repayments/deal the same and allows you to rent it out legally. You may have an admin fee of a couple of hundred quid.

Its all subject to the lenders 'criteria'...are you making repayments on time etc.

chrishar

hi acs
it's my only property right now but as i wrote i want to buy another so i wasn't sure if i was allowed to get another standard mortgage as well as the first one. i assume then it is ok to do this if the first one is on consent to let? and if the first one is on ctl, then after the term expires i have to change it to buy to let?

Cornucopia

Alternatively, look for "Let to buy". It can certainly be done, and can be more flexible than straight BTL.

You probably need to speak to a Broker to get an idea of what is possible, based on your own figures.

holly_hobby

If are to move to another property, and you wish to let your flat out, you will have to either do so under consent to let and if this refused, remortgage onto a BTL.

CTL is by application to the lender, and is typically timebound to around 3 yrs, as it is intended for accidental landlords - after which time the lender will look to move you onto traditional BTL terms. (at which point you can stay, or choose to jump ship and remortgage to an alternative BTL provider)

Once you're on CTL, you now want a residential mge for yourself.

If ther existing property is self sufficient rental receipt wise, there are several lenders whom will set aside (disregard) the existing mortgage commitment from their affordability assessment - the lender may also want evidence of the AST and that the existing mge lender is aware of its let status.

BUT, not all lenders do this and will include the existing mge (eg HSBC), so if affordability may be an issue, you will want a broker to asssit with sourcing a suitable resi lender for your 2nd mge.

As you new home will be a 2nd property, again some lenders may also restrict the max ltv circa 85% (ie nationwide), so again, if you have less than 15% deposit, this will be a further consideration for lender selection.

So, yes what you're after is achieveable, firstly speak to your lender re CTL, and if you have a deposit*, a mortgage broker with regards your new resi mge.

* if you don't have deposit, and there is a decent amount of equity in your current home, you could seek a straight BTL equity release remortgage, to release capital - the current max amount available will be max ltv of 75% and supporting rent. Rent should be 125% of mge interest, if you use 6% in your calcs, you'll ensure you've plenty of headroom to accomodate various lenders critera, of which many use an assessment rate below 6%). The associated mge interest will be a pertmitted deduction from gross rental reciepts for tax reporting purposes.

Don't forget you'll need to register with HMRC and report your net tax receipts for IT assessment. (a tax practitioner will assit until you get the hang of things).

Hope this helps

Holly

chrishar

Thanks Holly I think you have covered everything I need to know!