Switching Residential Mortgage to Buy to let

francy555

Hi Guys, i'm new on here and looking for some advice.

We live in Northern Ireland.

I currently have a residential mortgage with the Ulster Bank. I have a second property on which i want to build a new house.

This second property is located on a farm with a shared access farm lane and due this constraint Ulster Bank are the only bank/BS willing to consider a self build mortgage for a house on this property.

This is where i now need advice -

Ulster Bank will not allow me too have two residential mortgages with them and they will not transfer my current mortgage to a BTL as its exceeds 50% LTV. It is unlikely that another bank/BS will take the mortgage on due to negative equity.

Does anyone know if I inform Ulster Bank that i am no longer residing at my current property, living elsewhere, and intend to rent out my current house - are they legally obliged to change my mortgage to a BTL, as they are currently refusing to do so.

Thanks in advance for any advice/ points of view.

Thrugelmir

francy555 wrote: »

Does anyone know if I inform Ulster Bank that i am no longer residing at my current property, living elsewhere, and intend to rent out my current house - are they legally obliged to change my mortgage to a BTL, as they are currently refusing to do so.

Read your mortgage contact terms and conditions that you signed up to in accepting the offer. You will find that the Ulster Bank has the legal right to decide what you may or may not do. Until you've repaid the debt owed in full. This will remain the case.

francy555

Thrugelmir wrote: »

Read your mortgage contact terms and conditions that you signed up to in accepting the offer. You will find that the Ulster Bank has the legal right to decide what you may or may not do. Until you've repaid the debt owed in full. This will remain the case.

What if anything can they do though to make me live in the mortgaged property?

I don't think they have the legal right to decide where i live - perhaps i'm wrong?

dimbo61

No they cannot make you live anywhere !
What they can do is repossess your house as you have not asked permission to let the property ( consent to let )
Have you tried asking for consent to let ?

Thrugelmir

francy555 wrote: »

I don't think they have the legal right to decide where i live - perhaps i'm wrong?

They don't. They do have a legal right in as far as what the property can be used for.

francy555

dimbo61 wrote: »

No they cannot make you live anywhere !
What they can do is repossess your house as you have not asked permission to let the property ( consent to let )
Have you tried asking for consent to let ?

tbh if they repossessed the house they would be doing me a favour!

I don't think it would be in their interest to repossess the house - i never miss a repayment, the house is in -ve equity so forcefully repocessing the house from me would work in my favour.

kingstreet

You can't switch a mortgage from residential to BTL the way you think.

You have option one, which is to request consent to let from your current lender, which you may or may not have done.

The other option is to remortgage to a formal BTL product/lender but to do that you'll need about 25% equity in the property.

If you have exhausted option one, there appears to be nothing else you can do.

Voyager2002

francy555 wrote: »

tbh if they repossessed the house they would be doing me a favour!

I don't think it would be in their interest to repossess the house - i never miss a repayment, the house is in -ve equity so forcefully repocessing the house from me would work in my favour.

Sadly not!

If they were to repossess you would still owe your entire mortgage debt, and some pretty hefty fees would be added to it. They would sell the property for whatever they could get -- probably a good deal less than its current market value -- and you would continue to owe the remaining balance.

It is only in the USA that repossession wipes out the debt, not in Europe.

francy555

Voyager2002 wrote: »

Sadly not!

If they were to repossess you would still owe your entire mortgage debt, and some pretty hefty fees would be added to it. They would sell the property for whatever they could get -- probably a good deal less than its current market value -- and you would continue to owe the remaining balance.

It is only in the USA that repossession wipes out the debt, not in Europe.

Perhaps i'm looking at this in a simplistic way - but if they repocessed the house against my wishes, with never missing a repayment that i would have good grounds to just walk away?

I'm really annoyed with UB at the moment - i've banked there since i was 16 years old - they are advertising that they are willing to lend - we meet & exceed all the eligibility criteria for a self mortgage that would build our new house, but are refusing to lend to us because we have an existing residential mortgage with them - it leaves us in complete limbo!!

I won't be asking them for consent to lend - i'll be telling them that my house is going to be let out - they can deal with that info in any way they want!

M0ney

I think if you let the property out without consent you'd be breaking the T & Cs of your mortgage and they could in theory "call in" the loan and if you couldn't repay you'd be forced to sell and still owe the full amount. This would probably all go on you credit file meaning you'd find it difficult to access credit again for quite a while.

marathonic

francy555 wrote: »

I won't be asking them for consent to lend - i'll be telling them that my house is going to be let out - they can deal with that info in any way they want!

You may as well cancel your house insurance as well because, without consent from lenders, most policies are invalid.

If the tenant burns the house to the ground, you'll be left with an un-rentable house, still needing to make repayments on both mortgages and Ulster Bank having the ability to look for the sale of your new-build to recoup some of their costs - with you liable to the remainder.

Also, even if your insurance weren't invalid, how they will "deal with that info" is that they will not offer you consent to let. You appear to believe this isn't a big deal - but any new mortgage company will need this from them before they'll borrow more money to you.

I hate to be the bearer of bad news but you aren't the only one in Northern Ireland and the Republic of Ireland that's stuck in their current location. Be thankful if you aren't starting a family and stuck in a one-bedroom apartment.

You are in a better position than most if you have a site on which you can build. If selling this would cover most of the negative equity on your current home, then you have a lot more options open to you than most who bought during boom times.

For the record, I'm also with Ulster Bank. You say above that you "meet & exceed all the eligibility criteria for a self mortgage that would build your new house". How do you know this? Obviously, the bank will not tell you the precise detail of their affordability criteria - just the general guidelines and some high-level calculators. If you are basing your "meeting and exceeding" comments on these, then do you not realise that your current mortgage in negative equity has a SIGNIFICANT impact on the amounts banks are willing to lend?