Converting Residential to BTL - another provider?

shinyahashimoto1

Hi all,


Is there now a rule to stop you converting Residential Mortgage to Buy to Let with the same bank?

Short Story: Bought flat, residential mortgage, lived there for years, couldn't sell so got CTL from Halifax & bought house with missus. 1 year later Halifax sent letter saying CTL needs to a have date when you will move back in otherwise to get a BTL mortgage. Fair enough I thought.

However they have said I need to go with another provider to move from Residential mortgage to BTL & the rules had changed in the last 12 months.

Questions:

Are there any particular deals for going from Residential to BTL? I always though the "Switch to BTL" mortgage deals were from serial BTL landlords just moving for the better deal.
Do they need to go through the valuation process etc on the property? Or can they just "take over" the residential mortgage as is - changing the rate but not adding product fees? Just wondering this as I now have a tenant in & would prefer this to be as smooth as possible.

Details:
1 bed flat
Bought for 60k precrash
Now worth 40-45k :-(
Mortgage Left - 25k 17 years
Tracker Mortgage 0.5%. I am aware this will change to around 5% on BTL however the rent can still easily cover the payments.

Thanks

AnotherJoe

I think if you cannot just switch, which seems to be the case, then the negative equity could be a big problem. Have you got cash floating around to cover that and a deposit?

You might want to see if a broker can help, but on the face of it why would any lender loan more than a house is worth? The fact the rent would cover the mortgage is most likely an irrelevance what their concern is, should the house need to be sold, could they get their money back.

kingstreet

Realistically, the max loan to value for a BTL is 80%.

shinyahashimoto1

Hi,

Thanks for the reply - I don't have negative equity - the flat is worth around 40-45k and I only have 25k left to pay. I put down a large deposit when I purchased & overpaid the mortgage for years.

AnotherJoe

Ah, OK well in that case it looks as if you are good to go you'll just need another lender. Its not that "the" rules have changed, there arent any AFAIK, but it seems Halifax's have.

p.s on the face of it, overpaying wasn't the wisest thing to do. Your interest rate is as low as it will get so you could have got more by saving the money instead of paying it off, and you have lower interest payments to offset against the rent.

kingstreet

The value and loan amount will give you issues with many lenders as they will be below many minima.

shinyahashimoto1

Thanks AnotherJoe & KingStreet.

I'm afraid you might be correct. I phoned RBS, and they said the minimum amount they would do a BTL mortgage is 50k. I'm don't think if it was valued now it would reach that amount. I have also noticed many have minimum loan amount mortgages of 25k+(I am right on threshold).

Would you have any advise here? If Halifax are telling to leave Residential CTL but the loan amount I want is so low - would could I do? Would a mortgage broker be able to help?

The only other option I can see if paying mortgage off(I do not have 25k saved), or attempting to sell(market is very very slow in my area).



Stu

sam2015_2

You could get a personal loan for 25k and pay it off?

AnotherJoe

Definitely try a broker.