Cant get BTL mortgage.

Craig_Donny

Hey,


I have seen a property I would like to buy as a BTL. However on putting in a offer I find you cant get a BTL mortgage on less than 40k. The property is 37k but know she will take abit less.


(Yes I live up north, cheap houses!)


So my mum has offered to remortgage her house (which is currently paid off) for 25k and I will make up the rest, which comes to a payment of £105 a month but this is on a 25 year mortgage. She's 55 so not sure how likely they are to grant it.


I would just like to know your opinions on this, or if there is another way for me to do it?


Thanks in advance


Craig

chris198232

Hi Craig

It's probably not going to work with your mum, not to mention this bring against the lenders rules. She wouldn't get a mortgage over that period so you're better looking at other options!

Craig_Donny

Im not sure what other options I have apart from leaving it. Seems a shame as with not much work it would be a good investment with others in area selling for more.


I thought if my mother borrowed against her own house she could do whatever she wanted with it? Inc giving it to me.

kinger101

Craig_Donny wrote: »

Im not sure what other options I have apart from leaving it. Seems a shame as with not much work it would be a good investment with others in area selling for more.


I thought if my mother borrowed against her own house she could do whatever she wanted with it? Inc giving it to me.

You mum won't get a 25 year mortgage. She might get a 10 year mortgage. What's in it for her, other than financial risk?

Craig_Donny

kinger101 wrote: »

You mum won't get a 25 year mortgage. She might get a 10 year mortgage. What's in it for her, other than financial risk?

Nothing, just helping me out. I must be that amazing of a son!

MisterB1959

have you used a specialist mortgage broker to search the market?

Craig_Donny

Yes I have. They told me most wont under 50k and two wont go under 40k.

Other option maybe, take out a loan for 20k? I could probably make up the rest with savings.

chris198232

Many personal loans wont be allowed for BTL's. Cant you remortgage your house?

jjlandlord

Having your mother remortgage is certainly an option, if the figures work for you and if you are confident you will be able to pay back whatever happens.

As said, the main issue is that she would probably not get a mortgage over more than 10-12 years.

She would loan you the money so you would need to draft a loan agreement between you.
That way everything would be overboard for you to treat the interests as allowable expense for tax purpose.
The flip side is that she would have to declare the interests as income for tax purpose.

In any case, first it would be useful indeed to speak to a broker.

Craig_Donny

Thanks for the replys.

To remortgage my mums house I now see the problem with the years she could have one for.

My other option is to remortgage my own property. To get uoto 85% LTV I would be able to release 36500. Reason I didnt want to do this was because I wanted to use minimun deposits on BTL properties. However after sleeping on it I think this may be the better option as I can easily afford it. As I would then own that house. At a later date would I be able to mortgage the rental property to gain funds for another deposit?

Do you guys think this way is a good idea?

Thanks

Craig_Donny

Just to add that with remortgaging the rental, it will probably be worth between 40 and 50k once done. So will they let me mortgage on that amount for another BTL?