Getting a residential mortgage and change it to a Buy-to-let mortgage in 8 months?

redandblueroses

Hi all,

I would really appreciate it if someone can help me out. I have agreed with a seller to buy his apartment, now I am looking for a suitable mortgage but have encountered a problem.

I am planning to live there myself and then to let it out in 8 months time as I will be relocating overseas then. A mortgage broker told me that the banks wouldn't lend the money to me since it is a short term loan. However what I don't understand is, I guess it's quite common for people to change their home mortgage to a buy-to-let. So why wouldn't they? Especially the bank can earn a higher interest, they should be happy to do so?

Would the bank consider my situation individually? I am borrowing less than 50% of the apartment value and it is located in City Centre which would generate an income between £700-£750 pm. My mortgage would be expected to be £250-300 pm at the current interest rate.

My questions are as below:

My worry is would I be able to change it to a buy-to-let mortgage in 8 months?
And is there any bank more likely to do so for me?
Has someone else got the same experience and what did you do?

Thanks!!! :):):):)

kingstreet

Lenders don't change a mortgage from residential to buy to let.

You either;-

request consent to let on your residential mortgage, normally possible for a short time
or
you remortgage to a formal BTL lender/product, repaying the existing mortgage in the process.

A BTL product will normally require a 25% deposit or more and the rent to be at least 125% of the monthly mortgage interest, at an assumed rate of 6%.

Lenders can't assess on both residential and BTL bases at the point of application, just in case you need to change a few months down the road and many residential lenders don't offer BTL products, Nationwide being the prime example. You use its specialist arm The Mortgage Works, for such cases.

redandblueroses

Thanks Kingstreet, that's very helpful.

However, I didn't understand the last bit, do you mean I should go for a bank who offer both mortgages or I should go for a bank like Nationwide whom doesn't have own BLT mortgage?

Does a Buy-to-let mortgage require UK addresses in the last 3 years? Would that mean if I relocate to overseas I wouldn't be able to apply for it?

Thanks.

mrginge

Why on earth are you buying a flat if you're going overseas in 8 months?

kingstreet

However, I didn't understand the last bit, do you mean I should go for a bank who offer both mortgages or I should go for a bank like Nationwide whom doesn't have own BLT mortgage?

No. I'm not suggesting that. You would still have to go through the remortgage process and meet the eligibility criteria, so there's no benefit to doing that. I was simply illustrating that some well-known lenders don't offer BTL mortgages.

There may be lenders who offer BTL products to those living outside the UK. It's not my market, but others may be able to shed light on this.

redandblueroses

kingstreet wrote: »

No. I'm not suggesting that. You would still have to go through the remortgage process and meet the eligibility criteria, so there's no benefit to doing that. I was simply illustrating that some well-known lenders don't offer BTL mortgages.

There may be lenders who offer BTL products to those living outside the UK. It's not my market, but others may be able to shed light on this.

Thank you. I understand this. So you think I just go through a normal residential mortgage and deal with the rest when I have to leave?

Foxy-Stoat_3

redandblueroses wrote: »

Thank you. I understand this. So you think I just go through a normal residential mortgage and deal with the rest when I have to leave?

You could try that yes.

Look on some of the websites of banks and building societies, they will have sections on their sites about consent to let.

Yorkie1

Are you sure that the lease of the flat allows you to let it out? Useful to know before you finally commit yourself ...

Thrugelmir

redandblueroses wrote: »

As an investment This city centre is also a very good rental market. Better than leaving money in the bank.

Not easy to manage property from abroad.

gameforalaugh

We've gone through a broker to remortgage our house but whilst doing so, we've been gifted a deposit for a new home from a family member. Our broker has explained to Nationwide that in the near future, we would like consent to let our current property with a view to buying another. We've been told that the consent will increase the mortgage payments by 1% but that there wouldn't be a problem to swop. Maybe speak to a broker?

nubbins

Hi Red,

All you need is a good broker. What you need is a no redemption residential mortgage and then when you are ready just change it to a normal buy to let. I have done this so I would get rid of your broker or at least question why he says about the short term b%%sh%%, As long as you have 25% deposit and the interest only payment covers 125% of the rent you will be fine. Be aware if you go on say Moneysupermarket and enter your figures for a buy to let mortgag and it comes out at say £500 per month alender will calculate it on a lot higher rate, Natwest for example calculate on 7% so you would need something like £800 X 125% rental payments