Buying a second residential property

chursy

Hi guys

I want to purchase a second house having recently bought an apartment on residential mortgage. . Looking to purchase next year.

I am told that I may have to get a consent to let from my existing mortgage provider? What is the best way to manage this and get the consent needed. Looking for some good advice how to go about it

G_M

You are unclear: do you intend to let your current apartment out? If so, yes you'll need CTL, or to switch to a BTL mortgage.

If you plan to continue to live in the apartment, you do not need to change anything.

What about the new house? Is this to be a 2nd home for you? Or will you let it out? If so, again you'll need a BTL mortgage.

This may help:

* New landlords: advice, information & links

Hoploz

Yes, if you intend to let you need permission from your lender.

If you aren't going to let it but use both as your own homes then it is possible to have two residential mortgages on different properties, subject to the usual affordability checks.

If you fail those checks but still want to proceed you could always say you were going to let but not actually do so, but this is probably not a brilliant idea for obvious reasons.

Mossfarr

Its quite straightforward to get consent to let from your lender, you just fill in a request form and pay their admin fee (mine charged £100). They rarely refuse when you are buying a second property
If your mortgage is on a fixed term they will ask you to switch it to a buy to let when the fixed term ends.
mossfarr

G_M

Mossfarr wrote: »

Its quite straightforward to get consent to let from your lender,

Hmmmm... that's very dependant on the lender. Some banks never grant CTL - they insist you switch to a BTL mortgage.

chursy

Thanks everyone for the responses .

I will be letting my existing property out and want to purchase a bigger house for the family. I have a two year fixed mortgage with Halifax. Provided I get the consent as I understand banks are more than likely to push me towards getting BTL mortgage when the fixed term is finished.

Could I remortgage after two years with another lender ? will it have to be BTL and not a residential mortgage? What implications does that have apart from the higher rates - do I need a higher equity portion in the property too ie lower ltv?

silvercar

Could I remortgage after two years with another lender ? will it have to be BTL and not a residential mortgage? What implications does that have apart from the higher rates - do I need a higher equity portion in the property too ie lower ltv?

Yes. Yes. Generally need 25% deposit at least on a BTL, rates are not necessarily higher.

Of course, anything could happen in 2 years and deposit requirements may be lower/ higher/ the same. You would also have the option of taking an increase to the mortgage on your residential to fund the deposit requirements on the BTL. Remember also that house prices may be lower/ higher/ the same in 2 yrs time, effecting your LTV calculations.

clarky_cat

I have recently bought a 2nd property and am renting out my 1st. I too was in a fixed rate on my 1st mortgage. I called HSBC several months before the exchange who advised that I needed to request CTL just a few weeks before I intended to let as the start date would begin when they approve it. I did as they advised and received the consent ( for 12 months) about a week later.

In 12 months time I need to re-apply or move to a BTL mortgage. At this point my fixed rate will have ended so its possible they may force me down the BTL route but I know others who have stayed on a residential mortgage, and received CTL, for more that 1 year. You are likely to need 75% LTV to get a BTL approved.

You can download the form for the Halifax on the link below.

http://www.halifax.co.uk/mortgages/mortgage-information/letting/

chursy

Very useful - I spoke with the London and country brokers today and this is exactly what they said that a consent approval will be required by the next mortgage provider for the second house. I am assuming that if I get he consent bank would expect me to keep the residential mortgage with them rather then moving somewhere else ? Also is it likely you will buy a fixed product or just keep it variable ?

nicholbb

I recently asked a number of these questions of Halifax a few months ago. Had a good play with figures to see what could do, so was interesting to find how all worked but didn't make an application so rough findings only.

Adviser said Halifax didn't do BTL at that time (products come and go so ask) but consent to let could be easily got by calling central office.
They would need assurance payments would cover mortgage payments - £1 or £10,000 over a month is no difference to them but £1 under is going to scupper you.
A letter from a recognised estate agent saying would be x amount income (Arga? recognised body - sorry didn't write down).
Address you'd live at if place being rented (next door for you).


Halifax BTL had higher interest rates compared to residential ones, when on offer before, if you have equal deposits.
You can't use the income from the first place to count towards the second mortgage for affordability with CTL, need a years worth of accounts for that.

Get rid of any credit card debts (or plan to pay off). I have 10k of credit card interest free and it significantly reduced amount I could get (30 or 40k reduction). This is with cash set aside to pay off when due. Was said if could show plan to pay off wouldn't necessarily count, not worth risk for me so will pay off and rack up again.

Personal loans had no impact on value I could borrow that I could tell, tried a few different values and had no impact on total.

Don't think of being in arrears when applying, even those holiday periods. I have 4 or 5 months over payments and that was good.

Savings had little impact but 9/10 times having a smaller mortgage is better anyway (apart from your 6 month war chest for emergencies).

Won't take value of property abroad.

I could only get x5 my income as mortgage (+ overpayments), which seemed to be maximum.

Hope that helps.

chursy

Thank you ever so much ! Very useful indeed :beer::money: