Buy to let question

rms1

I am 63 years old and my current mortgage deal comes to an end in 18 months time at which time I will have an outstanding debt to The Halifax of £160K which I will be unable to pay. The value of the property is approx £320k.

My wife and myself would dearly love to remain in the property as we are unlikely to find something in our area that we can afford with the capital we have left.

One of our sons is willing to buy the house from us on a buy to let mortgage for the price of the outstanding mortgage. We would obviously pay the mortgage payments to him. Although not on paper, we would still retain the collateral in the property.

Is there any reason why this would not be legal as this is a perfect solution to our problem?

amnblog

A buy to let mortgage is a non regulated product which precludes you from letting to family members.


Your son would need a regulated product to make the purchase.


Whether it can be done would depend on his financial position.

rms1

I am sorry, what do you mean by a regulated product?

Financially it is not a problem to him.

amnblog

Residential mortgages (on your home) are regulated.


Buy to let mortgages (on a property you will let) are not regulated.


If you are purchasing a property to let on a buy to let mortgage but intend to let it to family, it will be classed as a regulated transaction. This is a problem for a BTL lender where products and product sales are not set up for regulation.


Hence this makes your scenario tricky (but not impossible).

Let_Us_See

Whilst there are still a couple of lenders willing to consider a regulated BTL, your position is difficult as you are selling and remaining in the property as tenants, and I think finding a lender under these circumstances will be very difficult.

If your son's personal finances permit might be easier for your son to purchase as a second residential home (or for dependent parents).

rms1

Ah, I see thank you for explaining that.

So if you don't mind me asking, how would it be possible whilst remaining legal. This is probably our only option.

amnblog

Let_Us_See wrote: »

Whilst there are still a couple of lenders willing to consider a regulated BTL, your position is difficult as you are selling and remaining in the property as tenants, and I think finding a lender under these circumstances will be very difficult.

If your son's personal finances permit might be easier for your son to purchase as a second residential home (or for dependent parents).

My thought was option two not option one.

rms1

Let_Us_See wrote: »

Whilst there are still a couple of lenders willing to consider a regulated BTL, your position is difficult as you are selling and remaining in the property as tenants, and I think finding a lender under these circumstances will be very difficult.

If your son's personal finances permit might be easier for your son to purchase as a second residential home (or for dependent parents).

Hmm, The problem is, we wouldn't want anything to impact on his ability to borrow for himself should he need to.

amnblog

Does he own a property currently?

rms1

Yes he actually owns 2 properties with mortgages.

amnblog

If he has room to raise the funds against his current properties the situation is sorted.