Living in a BTL property

greencee43

Hi All,

I've been searching on the forum to see if I could find any information relating to my query but haven't been successful so far. I'd be really grateful if anyone has any advice they could offer.

My circumstances have recently changed and I am about to become 'homeless' as my relationship has broken down and I have to move out of my ex's home. I have no where else to move to so am considering moving in to my btl property as it is about to become vacant.

If I do this, what are the implications? I should add that I have also become unemployed recently and am now claiming benefits. In order to be able to pay my mortgage at a later date, I may need to apply for help through the DWP. However, this would mean disclosing where I'm living to my lenders.

Can any body offer some helpful advice? Many thanks in advance.

PS: If anyone could recommend a financial advisor with integrity and good expertise, again, I'd be most grateful.

kingstreet

Moving into a BTL yourself after a number of years of letting is not an issue. It's only those who use BTL products to bypass residential mortgage income rules, who are in the wrong.

As owner occupation is considered safer for a lender, you are actually improving the lender's security, in a way. I wouldn't worry about it.

Wh05apk

You should contact your lender and advise them of a change in circumstances, and that you will be moving into the property.

greencee43

Thank you both for your advice and (Kingstreet) reassuring comments.

I have now contacted my lenders but was told (repeatedly!) that as I was in breach of my mortgage agreement it is possible for them to redeem the mortgage and ask for the outstanding balance of the mortgage. I asked if I could change the mortgage to a residential mortgage but they said they are no longer offering residential mortgages. The person I spoke to seemed quite inflexible, and didn't seem to offer any kind of solution to the situation. I'm not sure if my lenders are really that inflexible, or if I was just speaking to a call centre agent, with little experience and knowledge, who has been advised to just regurgitate this information to callers, without considering individual circumstances.

I'm not sure what my next move should be. She didn't take any further details from me or say that I would be contacted, or what would happen next. I just made a note of her name and rang off. I wonder now if I would have been better off waiting a little longer before informing them of my situation?

kingstreet

Which lender is this?

silvercar

I'm not that surprised. The lender gave you the mortgage on the basis that you would have the rental income to make the monthly repayments. Now you are telling them that you won't have the rental income. I don't know if they asked whether you were working and so could afford to pay the mortgage or not, but the need to claim SMI (support for mortgage interest) may have concerned them.

There is also the issue that BTL is unregulated whereas a residential mortgage is regulated; so by telling them they have to acknowledge this.

I suspect that they would have preferred not to know!

Prothet_of_Doom

Erm RENT the house to yourself? Give yourself a signed tennancy agreement, pay your deposit into the protection scheme, and do a 3 monthly inspection to ensure that the tennant, is looking after the place.

I wouldn't bother paying a letting agent to sort the paperwork.

Or if you really want to confuse the lender: get a mate to let the house from you, and using the rent a room scheme, pay him for use of a room, which pays the rent that he has to pay you.

How stupid is your lender? Can't live in his own house, so technically needs to rent out his house, to pay the BTL mortgage, and then rent somewhere else cause he needs somewhere to live.

Typhoon2000

Mortgage Express I bet. They are keen to close their books and looking at every avenue to call in loans. They were threatening to use their right to consolidate not long ago where if you want to sell one of your BTL properties they will only allow you do so on the proviso that that any excess funds from the sale is used to pay down any other properties you have with them.

kingstreet

Typhoon2000 wrote: »

Mortgage Express I bet

Same thought crossed my mind. I've never known a "normal" lender have much of an issue with it, unless it was ten minutes after the loan completed.

Wh05apk

Sorry to hear of your predicament, this is not the intended consequence of my comment, however, the mortgage was taken out as a BTL, you are now looking to live in it, hence changing it to residential, I must admit, I am not aware of any lender who would normally allow this, as the requirements and underwriting for a BTL are completely different to a resi mortgage, which would be regulated, by letting you live in the property, it effectively becomes a regulated mortgage for which the lender has not followed correct processes therefore if they were to attempt to re-possess the property they would likely fail.

greencee43

The mortgage is with Mortgage Trust. Has anyone heard of them?

There is also the issue that BTL is unregulated whereas a residential mortgage is regulated; so by telling them they have to acknowledge this.
Silvercar - Forgive my ignorance here but I don't understand how a body that's unregulated needs to be more transparent than one that's not. I thought that those were the types of organisations that didn't have to worry so much about crossing their t's and dotting their i's.