Renting a house on a residential mortgage HELP!!

bodybuilding123

Will try keep as simple as possible basically:

Im 22 years old self employed, Quite a bit of savings so last year I decided I wanted to buy a house and rent it out to generate a bit of extra income + have a house pay for itself over 25 years.

Spoke to a ton of mortgage brokers and advisors and all said it was basically impossible for me to get a buy to let mortgage considering my age and my income from my business + it would be my first ever house as I still live at home. One mortgage broker said I could easily get a residential mortgage and rent it out with no difficulties as he knows tons of people who do the same with no hassle so I went with his advice and it all seemed to go perfect the house is generating a nice little bit of extra cash every month, tenants are happy, letting company knew It was a residential mortgage and turned a blind eye and said it would be fine.

Now 7 months on after the tenants moved in, I am wanting to purchase a house with my girlfriend for us to live in now heres where I am worried and stuck in a rut, mortgage advisor that helped set it all up has vanished, number no longer recognised. Unsure what steps I need to take to be able to purchase a house with my girlfriend.

First thoughts, I remember the mortgage broker said If circumstances changed id just need to call mortgage company and ask for consent to let as things have changed and I no longer want to live in the house I'm renting, thought this would be the way to go until the mortgage advisor at persimmon new builds said id face a £7,000 stamp duty fee on the new build with my girlfriend as I own another home.

so basically I want to know what the best way forward is:

a) Try to get consent to let now while tenants still live in the property?
b) try to get consent to let once the tenants agreement ends in June?
c) Wait till June, get rid of tenants, try to sell the property (would I get my deposit back?) to avoid the £7,000 stamp duty fee I can't afford, so I can move in with girlfriend into a new build?

Obviously the priority here is being able to get this new home with my girlfriend, wishing I could keep the rental property going but happy to let go if it means avoiding huge fees that I can't afford to be able to move in with her.

Any help would be hugely appreciated.

Ozzuk

I'm not surprised you can't contact that mortgage adviser any more! Advising you to commit fraud!

Even if you get a consent to let, the 3% duty will still be applicable.

You could sell the house with tenants, not impossible but usually price would reflect this, given you've only owned the house a few months you'll likely be facing a loss.

Why can't you give them notice (assuming up in 12 months) and move in in 5 months time yourself? Or sell the house then? Or offer to buy them out of remaining term and either move in/sell?

What deposit are you referring to??

Bob_Bank_Spanker_2

Well, if you genuinely cannot afford the SDLT then you need to sell the house you own, it's as simple as that.

theartfullodger

So, do you think that some might speculate that mortgage fraud is being carried out, probably/possibly, certainly breaking contract conditions? Suggest you write to your lender coming clean on all matters, hoping they don't repossess as they have a right to. And you pay all their costs for doing so.

And yes, it has happened.

If tenants ddon't want to leave you've pretty much no chance of getting them out by June. See this...
http://www.landlordzone.co.uk/forums/showthread.php?75530-Time-to-repossess-statistics (2018 would be a better estimate..)
- for repossession times through the courts

Best regards to all

Guest101

bodybuilding123 wrote: »

Will try keep as simple as possible basically:

Im 22 years old self employed, Quite a bit of savings so last year I decided I wanted to buy a house and rent it out to generate a bit of extra income + have a house pay for itself over 25 years. - Excellent.

Spoke to a ton of mortgage brokers and advisors and all said it was basically impossible for me to get a buy to let mortgage considering my age and my income from my business + it would be my first ever house as I still live at home. - so you decided to opt for another investment. One mortgage broker said I could easily get a residential mortgage and rent it out with no difficulties as he knows tons of people who do the same with no hassle so I went with his advice and it all seemed to go perfect the house is generating a nice little bit of extra cash every month, tenants are happy, letting company knew It was a residential mortgage and turned a blind eye and said it would be fine. - 'letting company' you mean your agent? Anyway, so you decided to commit mortgage fraud....

Now 7 months on after the tenants moved in, I am wanting to purchase a house with my girlfriend for us to live in now heres where I am worried and stuck in a rut, mortgage advisor that helped set it all up has vanished - amazing, didn't see that coming... , number no longer recognised. Unsure what steps I need to take to be able to purchase a house with my girlfriend. - well surely you would be better off moving into the property you own?

First thoughts, I remember the mortgage broker said If circumstances changed id just need to call mortgage company and ask for consent to let as things have changed and I no longer want to live in the house I'm renting - so you were living there? , thought this would be the way to go until the mortgage advisor at persimmon new builds said id face a £7,000 stamp duty fee on the new build with my girlfriend as I own another home.

so basically I want to know what the best way forward is:

a) Try to get consent to let now while tenants still live in the property? - You'll still be liable to the stamp duty
b) try to get consent to let once the tenants agreement ends in June? - You'll still be liable to the stamp duty
c) Wait till June, get rid of tenants, try to sell the property (would I get my deposit back?) to avoid the £7,000 stamp duty fee I can't afford, so I can move in with girlfriend into a new build? - Depends, Selling would cost you a significant chunk anyway, £7k is probably about right

Obviously the priority here is being able to get this new home with my girlfriend, wishing I could keep the rental property going but happy to let go if it means avoiding huge fees that I can't afford to be able to move in with her.

Any help would be hugely appreciated.

A life lesson, as you are still young - don't commit fraud

bodybuilding123

The house isn't suitable for me and my girlfriend to live in, the deposit I put into buying the house 20% I think.

Guest101

bodybuilding123 wrote: »

The house isn't suitable for me and my girlfriend to live in, the deposit I put into buying the house 20% I think.

In what way is it not suitable?


Does one of you have a disability that requires specially adapted layouts?

NinaSwiss

bodybuilding123 wrote: »

The house isn't suitable for me and my girlfriend to live in, the deposit I put into buying the house 20% I think.

I'd imagine that how much you loose or dont loose will depend on how much you sell the house for.

If I buy a 100k house using 20% deposit and then sell it for 110k, I'll make at least 10k on top of the original 20k deposit:
110k - 80k(owed to lender) = 30k

However if the house then sells for 90k, I'll make a loss.
90k - 80k(owed to lender) = 10k

Bear in mind you will still have selling costs(estage agent, solicitor), possible early redemption to account for.

Ozzuk

One other thing to check, as your mortgage adviser probably didn't point this out as well...you may have a significant mortgage redemption penalty to pay if you cannot port your mortgage, details of which will be in your mortgage information.

Another thought, if you haven't lived there then possibly CGT tax would apply (if you actually made money). However...given that you haven't declared you are living there HMRC would probably not find out (just stating fact, not what I think of that!). Where are you registered to vote/council tax?

foxy-stoat

You need to crunch the numbers to work out if it's worth continuing to let it, taking into account proper mortgage, getting consent to let, working out your income tax liability, and future capital gains taxes to pay when/if you sell and implications on future second home purchases....also the tax allowances are changing in April and getting steadily worse for landlords.

Good luck and let us know how you get on.

G_M

* letting on a resi mortgage - fraud

* selling without completing a tax return - tax evasion on CGT

* renting without completing a tax return - tax evasion on income tax
(I bet you're not declaring it as too much risk mortgage lender would find out?)

* insurance? landlords? If not, invalid.

What address does the mortgage lender have for you? If the property (most likely) then the tenants have probobly sussed out you don't have a BTL mortgage. So when you start eviction process, what might they do.......?

You took dodgy advice (knowingly) from a dodgy adviser, who's done a runner, and now want advice...? This is a moneysaving forum, but is

a) aimed at consumers, not business people, and
b) not aimed at helping folk get round the law

edit: but my advice:

* write to the mortgage lender and infom them the date the tenancy started.
* complete a tax return for the rent by the deadline for whichever tax year applies
* evict the tenants, legally
* sell the property
* complete a tax return for CGT
* start again, buying a home for yourself/partner, avoiding additional SDLT since you'll be buying a 2st property