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What happens if need to switch residential to buy-to-let early in a fixed mortgage?
Squirrelmonkey
Posts: 3 Newbie
Hi, looking for some advice please.
Our mortgage fixed rate period has finished and we want to find another - ideally for 3 or 5 years seeing as interest rates are low now.
The problem is that in the 12-18 months time we're likely to have to move areas. We don't want to sell our current property, because we may not have to move areas forever so we'll want to ask our lender (the Woolwich) for consent-to-let.
If we fix for 5 years now, and in 12-18 months ask for consent-to-let I understand they may only grant that (if at all) only for a one or two years.
My question is: what happens at the end of that period when we may still need to let out the property, but will still have several years left on our fixed rate?
Will we need to switch to a buy-to-let and - my big concern - will the lender make us pay an Early Redemption Charge to do so?
If we fix now, is there any advantage to fixing for a shorter period (2 or 3 years) than a longer period (5 years)?
We've got about a 50% loan-to-value ratio, but our income is low - many lenders would say it is not enough for the loan (because our income has fallen since we took out the mortgage).
Thanks for any advice...
Our mortgage fixed rate period has finished and we want to find another - ideally for 3 or 5 years seeing as interest rates are low now.
The problem is that in the 12-18 months time we're likely to have to move areas. We don't want to sell our current property, because we may not have to move areas forever so we'll want to ask our lender (the Woolwich) for consent-to-let.
If we fix for 5 years now, and in 12-18 months ask for consent-to-let I understand they may only grant that (if at all) only for a one or two years.
My question is: what happens at the end of that period when we may still need to let out the property, but will still have several years left on our fixed rate?
Will we need to switch to a buy-to-let and - my big concern - will the lender make us pay an Early Redemption Charge to do so?
If we fix now, is there any advantage to fixing for a shorter period (2 or 3 years) than a longer period (5 years)?
We've got about a 50% loan-to-value ratio, but our income is low - many lenders would say it is not enough for the loan (because our income has fallen since we took out the mortgage).
Thanks for any advice...
0
Comments
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Depend on the lender's mood at the time. They may grant consent to let for a fixed time span, they may insist you move to a BTL mortgage or they may refuse both.
If they grant consent to let and then refuse to extend it, they may offer you a BTL product.I'm a Forum Ambassador on the housing, mortgages & student money saving boards. I volunteer to help get your forum questions answered and keep the forum running smoothly. Forum Ambassadors are not moderators and don't read every post. If you spot an illegal or inappropriate post then please report it to forumteam@moneysavingexpert.com (it's not part of my role to deal with this). Any views are mine and not the official line of MoneySavingExpert.com.0 -
They will be unlikely to grant indefinate CTL, or to repeatedly renew CTL each time it expires. Long-lasting letting clearly indicats it's not a domestic arrangement but a business one.
It's also possible that when first applying for CTL they make you come off the rate fixed product (perhaps with a penalty) and move to standard variable.
All depends on the lender.
A mortage adviser may be able to help with the general attitude of the specific lender.0 -
Thanks both.
G_M - you mention, perhaps a penalty - any idea what sort of order? It' the risk of an ERC-type penalty that worries me most...0 -
All discounted or fixed rate products have penalties if you come off them early. Read your mortgage conditions: it will be specified in there.0
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Thanks. So, basically, you mean an Early Repayment Charge...? I'll have a look at the conditions when they come through.0
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