Buying new house but renting existing property

Mattc1984

Hi all query for anyone in the know about mortgages:

If I have a residential mortgage and want to buy a new place and keep existing properly, i need a consent to let from existing mortgage provider and then can proceed to taking out the new mortgage on the new house.

Question is does the new mortgage provider need to see this consent to let before I can get the new mortgage?

My query is because my current properly was bought 6 years ago on a first time buyer scheme and I have an equity loan against the property which was the scheme at the time. I am not meant to be able to rent the place out unless I 'staircase' out this percentage of the equity loan so I own it in its full value. Problem with this is that I'd need additional capital as a deposit on the extra lending I'd need to remortgage this loan out, and I don't have enough to do this and put a deposit down against the new place.

I know the answer to this is that I just shouldn't rent the old place out, but I would be doing it legitimately in a year or so's time when I have the additional money as a deposit. Just can't do them both at once.

I have spoken to Connells letting agency and explained this to them, and they are happy to manage and let my property out without seeing a consent to let I.e turning a blind eye to it. They actually said to me that it's very common that people don't get consent to let and that approximately 50% of their landlords that probably haven't go this. It's hearing this that has lead me to wondering if I can get away with it temporarily to facilitate me moving and keeping my property, but concerned when I go through the mortgage application this will come up and they will want evidence from my mortgage provider and see the consent to let paperwork.

I know the answer is just not to do this, but want to know if it's something I can take a risk with or if it just won't ever happen, in which case I won't do it/waste my money trying.

Thanks
Matt

Pixie5740

Help to Buy was created to help people get on the property ladder not to create more landlords.

Your current mortgage lender most likely won't give you consent to let because you are not eligible for it. A new mortgage lender might treat this as a second mortgage rather than a new residential mortgage so it will come down to affordability. Can you demonstrate that you can afford a second mortgage without letting out the current property?

The fact that you are going to use a shower of sharks like Connells as your letting agent speaks volumes.

Innys1

Depends if you're bothered by being a mortgage fraudster or not.

As Pixie says, though, Help To Buy wasn't intended to be Help To Rent.

Mattc1984

Yeah I knew this would be the answer guys. As I said I want to do it legitimately but can't afford to do both at same time. Aware this isn't a justification in the eyes of the regulations.

I used the scheme to help get on property ladder 6 years ago, I'm not trying to take advantage of it by buying and immediately trying to let it out.

I could cover the cost of both mortgages with my salary yes, so the affordability is ok. But will that be sufficient?

I will be doing this properly when I have the extra deposit money.

As for Connells, I've no experience of letting places out so had no idea what they were like, just went to them as I had heard of them.

Mattc1984

So i guess if I go with what pixie said. I suppose I could just take a second mortgage and just keep my flat empty. Would that be ok in terms of the new mortgage, you can take a second mortgage if you can afford it?

Pixie5740

Mattc1984 wrote: »

Yeah I knew this would be the answer guys. As I said I want to do it legitimately but can't afford to do both at same time. Aware this isn't a justification in the eyes of the regulations.

Then you can't afford to do it full stop.

Mattc1984 wrote: »

I used the scheme to help get on property ladder 6 years ago, I'm not trying to take advantage of it by buying and immediately trying to let it out.

We'll need to agree to disagree on that one.

Mattc1984 wrote: »

I could cover the cost of both mortgages with my salary yes, so the affordability is ok. But will that be sufficient?

That doesn't necessarily mean you will meet the affordability criteria especially with the introduction of MMR last year. Speak with a mortgage broker.

Mattc1984 wrote: »

I will be doing this properly when I have the extra deposit money.

Why not just wait until you can do it properly then?

Mattc1984 wrote: »

As for Connells, I've no experience of letting places out so had no idea what they were like, just went to them as I had heard of them.

:eek:

See New Landlords: Advice and Information for New Landlords and Letting Agents: How should a landlord select or sack? to try and educate yourself before becoming a landlord.

Mattc1984

Thanks. I knew these would be the answers.

I need to move due to child care reasons which is why I want to move now and these flats dont sell quickly, which is why I'd ideally like to let it.

Thrugelmir

Mattc1984 wrote: »

I have spoken to Connells letting agency and explained this to them, and they are happy to manage and let my property out without seeing a consent to let I.e turning a blind eye to it.

Not up to them to tell you how to run your business nor monitor it either. A potential tenant may well ask the question though. If they were to find out then they'll have leverage should they have need to use it. Your insurers may not be so keen to ignore the fact either should you make a claim.

G_M

booksurr wrote: »

.......What lies you tell them regarding your plans are between you and your maker.

OP has not mentioned his parents.

Though that could of course be the solution: bamk of mum & dad.

AdrianC

If your income is sufficient to meet mortgage affordability criteria on two residential mortgages, then can I suggest the easiest solution may well be to staircase out the help to buy loan? Then that will cease to be an issue completely.

You will probably find that, if you're intending to buy somewhere else to live in, your mortgage lender will refuse you consent, and suggest you move that property to a BtL mortgage. This will be a better product for you for the long term, and may well help you meet the affordability criteria if you're borderline.

Any reputable lettings agency would ensure a potential landlord wasn't trying to let a place which was under a residential mortgage without CtL.