Mortgages for Tier 2 vs. ILR & residential vs. buy-to-let conversion

arlanda

Hi everyone, I am new to the forum and this is my first post. I have a bunch of questions around mortgages so thought I'd describe my situation and see what you think. I am relatively new to the UK property and mortgage scene and only starting my research

(1) I am currently on Tier 2 General visa and have 10 months left until Indefinite Leave which I understand would unlock lower residential mortgage rates. Are there borrowers who would give a mortgage to me while still on Tier 2, how do interest rates compare, and is it worth it? I am leaning towards waiting till I am on ILR, also because I will be able to save up for a higher deposit over the 10 months, and collect all the information I need

(2) I live in Central London W1 in an amazing 2 storey maisonette rental at a very low price. My ex-partner and I rented it cheaply in a dilapidated state, painted and furnished, and now that we are no longer together I am renting out second floor. Basically it’s an amazing deal I am unwilling to let go of. I would like to stay as long as I can. The property is in an investment portfolio of a company-owner and has not been renovated in 20 years since its purchase, and management company are talking about a complete overhaul, in which case I imagine all tenants will be asked to leave. There is no way I will find anything as attractive even for 250% of what I am paying now…

(3) At the same time I want to buy an apartment in a new development in Canary Wharf. I can only afford a residential mortgage (10%, max 15% deposit rather than 25%). Besides, I believe most lenders will not allow buy-to-let mortgage if you don't already have a primary residence that you own. If my rental comes to an end, the plan is for the the new place to become my primary residency, in the meantime I would like to keep both. There are multiple questions and risks associated with it. Would appreciate your views on what my options are and what my conversation with lenders should be?

Thank you for reading

csgohan4

arlanda wrote: »

Hi everyone, I am new to the forum and this is my first post. I have a bunch of questions around mortgages so thought I'd describe my situation and see what you think. I am relatively new to the UK property and mortgage scene and only starting my research

(1) I am currently on Tier 2 General visa and have 10 months left until Indefinite Leave which I understand would unlock lower residential mortgage rates. Are there borrowers who would give a mortgage to me while still on Tier 2, how do interest rates compare, and is it worth it? I am leaning towards waiting till I am on ILR, also because I will be able to save up for a higher deposit over the 10 months, and collect all the information I need- Lenders may be cautious to lending to someone with a visa that runs out in 10 months. They only care about the now, not if.

(2) I live in Central London W1 in an amazing 2 storey maisonette rental at a very low price. My ex-partner and I rented it cheaply in a dilapidated state, painted and furnished, and now that we are no longer together I am renting out second floor. Basically it’s an amazing deal I am unwilling to let go of, and also have £1000s invested in. I would like to stay as long as I can. The property is in an investment portfolio of a company-owner and has not been renovated in 20 years since its purchase, and management company are talking about a complete overhaul, in which case I imagine all tenants will be asked to leave. There is no way I will find anything as attractive even for 250% of what I am paying now… - Why did you spend that kind of money in a property you only rent and not own??? You won't get any of it back

(3) At the same time I want to buy an apartment in a new development in Canary Wharf. I can only afford a residential mortgage (10%, max 15% deposit rather than 25%). If I lose my rental I want the new place to become my primary residency. I am toying with an idea of buying on a residential mortgage, living there for 6 months (or a min required period) while subletting my room in Central London. There are multiple questions and risks associated with it. Would appreciate your views on what my options are and what my conversation with lenders should be? - Does your LL contract allow subletting?
Thank you for reading

Read some of the stickies on the forum in buying a house and lurk around

arlanda

csgohan4 - re #2, it would be worth it even if I have to move out tomorrow. The cost of painting was made for by unbelievably low rent during the first year already, and the furniture we had already from the previous place. I feel it was worth it for the experience of living in a 1000 sq. ft property minutes from Oxford Circus. Besides, rent from the sub-let more than covers that "investment". If I have to walk away from it I can without losing any money other than future opportunity to pay about 50% of what an equivalent rental would be

csgohan4

arlanda wrote: »

csgohan4 - re #2, it would be worth it even if I have to move out tomorrow. The cost of painting was made for by unbelievably low rent during the first year already, and the furniture we had already from the previous place. I feel it was worth it for the experience of living in a 1000 sq. ft property minutes from Oxford Circus. Besides, rent from the sub-let more than covers that "investment". If I have to walk away from it I can without losing any money other than future opportunity to pay about 50% of what an equivalent rental would be

Renting is not an investment, it is dead money . However it provides you with a roof over your head and non of the responsibilities as a home owner.


Do you have permission to sublet the flat and it seems that cashflow will be going soon if the LL wants to refurbish the whole block.


All good things do come to an end, so prepare for the worst.

arlanda

csgohan4 - I do have the permission to sublet, this is not the point of the question I posted. I am trying to prepare for the future which is why I posted. I am trying to understand what my options are and doing scenario planning. Regarding the mortgage fraud, again this is not what I am asking. I know some lenders allow switching and there are specific terms for that. This future flat will be my primary residence, it's just a question of months or years

csgohan4

arlanda wrote: »

csgohan4 - I do have the permission to sublet, this is not the point of the question I posted. I am trying to prepare for the future which is why I posted. I am trying to understand what my options are and doing scenario planning. Regarding the mortgage fraud, again this is not what I am asking. I know some lenders allow switching and there are specific terms for that. This future flat will be my primary residence, it's just a question of months or years

See what a broker says in regards to your current visa situation and go over that first, before you discuss financial situation

Holmesy999

I too would be interested in any advice in mortgages whilst on a visa- I am arriving on a spouse visa which is only good for 2.5 years and needs to be renewed, so I assume we struggle to find any mortgage, let alone a decent rate (I bet they only count my wife's wage or something)

minhp

Halifax with minimum deposit 10% and the rates are as per their website. See more here https://www.halifax-intermediaries.co.uk/criteria/mortgage/default.aspx

Nationwide - you must have ILR or British citizenship or EEA nationals

HSBC, Santander, TSB - max LTV 75%

Barclays - haven't asked them yet :-P I have current accounts with all of them.

MortgageMamma

residential 75% LTV, unsure about the length of time left on your T2V though so perhaps may be sensible to wait? Waiting will open up a whole host of other lenders.

Regarding buy to let, again 75% LTV, you will need to cover the mortgage payment by approx 145%


I don't have a lot of experience with Non UK citizens as I am very far North so the cultural mix is more UK Citizens howver I know there are some very experienced brokers in London who will be better geared to answer your questions who deal with this type of scenario every day.

BeattieOG

I can only speak to your (1) - I'm an EEA national and OH (non-EEA and not British) has a residence card (needs to be renewed in 2019) - we were told we could only apply to Halifax and Natwest. Got an AIP with both, pursued Natwest and joint mortgage approved. So I'd say possible but need to ask a broker to check lender criteria and, if you only have 10 months to wait, better to wait as you'll have more options with ILR

drpbalaji1960

I suspect it will be very challenging to find a lender for a high value mortgage with ur current visa status


But careful and research would be a good option apart from waiting for ur ILR and apply for mortgage
Hope this helps