Buy to let or FTB?

ComputeAngel

hiya,

This question is for one of my friend.

Some details
- She is a house wife and her partner is a IT contractor
- Her partner pays her 640£/month to do some admin tasks for him.
- Her partner has also made her 50% share holder of the company to reduce his tax liability, but she is not the major earner.
- She can produce a SA302 for last three years showing about 40-50K income.
- They live in their own house which is on mortgage but the mortgage is on only her partner's name.

Now the questions is will she be able to buy a house and qualify for a FTB mortgage on her own? or they have to apply for buy to let if they want to buy another house?

Thanks

csgohan4

if her partner intends to live with her, likely lenders want the partner to be on the mortgage.

ACG

Those 2 mortgages are complete opposites. It is not about their circumstances as to which they apply for, but what they plan to do with the property.

Will it be lived in by them or will it be let out?

ComputeAngel

ACG wrote: »

Those 2 mortgages are complete opposites. It is not about their circumstances as to which they apply for, but what they plan to do with the property.

Will it be lived in by them or will it be let out?

I understand that these mortgages are opposite, however, my main question was regarding the definition of FTB? Will she be treated as a FTB?

Also, If you are not planning to live in your house full time, then can you buy the house as a FTB and then rent it out partially? (of course with permission of lender).

But if you are not a FTB, then you have to go for buy to let, but most of the lenders don't lend you unless you have own a property yourself and in this case she does not :-)

ACG

Your friend needs to sit down with a broker.
First time buyers can buy Buy to Lets but lenders are limited.

If your friend does not expect to live in the property permanently im not sure buying is the best option, what happens if the lender does not allow them to let?

MortgageMamma

I would advise your friend not to play the system. If she intends to let it, buy to let mortgage. If she intends to live in it, residential mortgage. Buying on a residential mortgage could result in a lender not granting consent to let, invalidating any insurance policies if the property is then let out.


Why is your friend not on the mortgage for the property she lives in?


This weblink may help in terms of stamp duty land tax liability. https://www.gov.uk/stamp-duty-land-tax/overview

kingstreet

Q - does she have 25% deposit or more?

Q - will the rent cover the mortgage interest by 125% or more using a rate of 5.5%?

Q - are they married? If so, by purchasing a BTL the "unit" is increasing property ownership from 1 to 2, so the 3% SDLT surcharge will apply.

These are all questions a decent broker will put to them during the early planning stages. They might as well start thinking about the answers now.