Mortgage on current home to buy our next - BTL?

krishna

We currently own one house, which we live in (no mortgage). We are looking to move and planning to let the existing house in order to help fund purchase of the next. Is it a buy to let mortgage we are looking for? Obviously we are not actually BUYING to let since we already own the property to be let.

herbiesjp

If you are raising the funds on the current property which will be let out , you will need a buy to let mortgage

The mortgage on the new property, if one will be needed, will be on a residential basis

HTH

krishna

If you remortgage a property you are living in and then later on you move without selling, do you transfer the mortgage to the new house, or does it stay with the initial property (e.g. if you then let it)?

homer_j_3

if you raise a residential / non buy to let mortgage on your current property, you can apply to transfer to a new property under the portability rules of the product - if they have them. Its not guaranteed and therefore not recommended that you rely on it. You are best doing what Herbie suggested in his first post.

MarkyMarkD

It depends what the respective values are.

There's much to be said for buying the new property with a residential mortgage, and then letting out the old property.

You will almost always get a slightly better rate on a residential mortgage, and the interest is still offsettable against the rental income (to the extent that the mortgage value is less than the value of the rented property at the beginning of the rental business).

You will only increase your costs by taking out a mortgage on your current property and then moving it to your new property.

MarkyMarkD

If you rent out house A when moving to house B, on which you are seeking the new residential mortgage, then you should be able to include the rental income in your income for mortgage purposes.

If you then wish to rent out house B at a later stage, you can do one of two things:

(1) ask the residential mortgage lender for consent to let. Most lenders will let you do this, at least for a period of time, in exchange for a fee (always) and (sometimes) an increase in rate;
(2) switch the mortgage to a Buy-to-Let mortgage at the time you wish to let it, or when the permission to let on the residential mortgage expires.