Which mortgage? Buy to let or standard?

Rachaelo1986

I wonder if anyone can help me, I have a house worth 170k with a 115k mortgage on it. I am currently renting the property out as I have moved house due to work. I am living with family in another part of the country and am going to be saving for the next 2 years to allow me to buy another house and keep the original house as a pension pot.

My question is, would it make more sense for me to get a 2 year buy to let mortgage for my property or get a regular mortgage for 2 years until I am in a position to buy the second property?

Any help would be much appreciated.

Yorkie1

1. Do you have consent to let already (I'm assuming it's not on BTL at present)?

2. If so, when does this consent to let expire?

3. Are you considering changing mortgage product and/or lender?

Rachaelo1986

Hi thanks for the reply.

We don't have consent to let and our mortgage which is a standard rate is up for renewal in February and we are open to moving.

Do buy to let mortgages tend to be cheaper?

Thanks

Armorica

It's not a matter of which is cheaper. It's a matter of whether you are living in or renting out the property?

Yorkie1

As you are not living in the property and it has a residential mortgage, you are breaching the T&Cs of your mortgage by letting it out without asking for, and obtaining your lender's permission (this is consent to let). You are lucky that they have not picked this up and imposed a penalty of some description on you.

You do not have the option of just getting another residential mortgage because of this. You would be committing mortgage fraud if you applied for a new product with a different lender, or went through the full affordability / advised route with your current lender for a new product, because you would be lying about your residential status.

Some lenders do allow online transfer of products without going the advised route - but again I come back to the point that you should already have obtained CTL.

Given that this is a long-term letting out, in my view you should be looking to regularise the position with a BTL mortgage. This assumes you have sufficient equity in the property. You are running a business and it should be treated as such.

Go to a broker for the BTL - most aren't available direct.

Annisele

Have a look at G_M's mammoth post for new landlords. It has some information about mortgages - and almost certainly includes other stuff that you don't know yet but is useful to you. For example, if you didn't know about CTL it's possible you haven't checked your insurance is valid - and you don't want to find out it isn't after the place burns down.

BTL mortgages tend to be more expensive than residential, because they reflect a higher risk to the lender. But you can't apply for a new residential mortgage with a new lender, because you're not actually living in the property. You could ask your existing lender for consent to let - and depending on your current lender and their CTL terms, that might be a good idea. If you do decide to go to a BTL product (and ultimately you're going to have to switch) then I agree with Yorkie; you need to see a broker.