Going from residential to buy to let mortgage - advice

jk1122

Hello all

In the next 6 months or so I'm planning on changing mortgage and could do with some advice on any problems I might face.

A summary of the circumstances are as follows:

I currently jointly own a property with a family member on a residential mortgage. Said family member plans to move out and buy a property by themselves. Therefore, I would like to buy them out of their half of the property so I own it all by myself.

On my current salary I wouldn't be able to borrow enough money on a residential mortgage to buy the property. I do however have a fairly good amount of equity in the property. If I remortgaged I would have enough money to pay the family member their share and still have 25% equity to put down on a buy to let mortgage.

My question is, would a lender provide me with a buy to let mortgage for my current property, if I don't get an additional property on a residential mortgage? One lender I checked (The Mortgage Works) won't seem to give a buy to let mortgage unless you're buying another property elsewhere.

The plan is to convert this property to a buy to let mortgage and rent it out for a couple of years, until I'm in a position to live there alone (on a residential mortgage). In the meantime, I'd be living back with the parents.

I realise this is a long post and I hope it makes sense.

Any advice would be greatly appreciated.

Thrugelmir

Ownership of a residential property is a requirement of many BTL lenders. As provides an additional layer of security.

How much do you earn? As this may impact your ability to obtain a BTL mortgage as well.

jk1122

Thrugelmir wrote: »

How much do you earn? As this may impact your ability to obtain a BTL mortgage as well.

Thanks for the reply. Approx. £20k at the moment.

The property is very rentable (flat, located very near to town centre) so the rental income requirements won't be a problem.

Surely there must be some lenders for BTL where ownership of a residential property isn't essential?

marsman802

Another sign of the times. We got a buy to let in 2007 but didn't get a residential until 2011. Just gets tougher and tougher doesn't it.

Thrugelmir

jk1122 wrote: »

Thanks for the reply. Approx. £20k at the moment.

The property is very rentable (flat, located very near to town centre) so the rental income requirements won't be a problem.

Surely there must be some lenders for BTL where ownership of a residential property isn't essential?

£20k income is below some lenders requirements.

Lenders base their decisions on risk not sentiment.

kingstreet

TBH many lenders will assume you'll do this and continue to live in the property.

Expect hurdles and obstacles.

Mortgage_Mark_2

There are certainly a few options of lenders who will lend on a BTL without owning a residential property, however with an income of £20k you might struggle to meet the minimum level required.

One lender I can think of will be absolutely fine with you not being a residential homeowner too but have a minimum sole income of £18k, if LTV is under 80%?

I'd speak to a broker about this as there will be options but you will probably not find them yourself.

Good luck.

mph284

BTL mortgages are tricky and I have one at the moment.

Things that will be key:
Rental income must cover the mortgage payments by 125%
LTV needs to be at least 80% to get a decent deal.

If the aim is to live in a property in the future then fine but if you think for any reason you may not BTL mortgages can be a real pain to get away from. Research thoroughly before you jump into a BTL mortgage.

Hope it helps

nancy_c_b

I'm not sure on the likelihood of getting a BTL mortgage on a house you already own, but I believe the only lenders to offer BTL when you don't already have a mortgage, are Virgin and Natwest. And one of us had to be earning a minimum of 25k.