Buy To Let Mortgage on a Owned House

VillaLion

Hi,

I'm after a bit of advise for this situation:

I own a house with no mortgage which is currently being rented out. I want to raise some money to build an extension on my current residential house and plan to do this by releasing 20% of the equity in the house which is being rented out with a Buy-To-Let mortgage. First question: I suspect this is not an issue? The rent I receive on the property would be over 1000% of the interest amount of the mortgage.

Next year I plan on moving into the rental house and make it my main residence. At this point, the property will have a Buy-To-Let mortgage on it and I realise that living in the property would be against the terms and conditions of the mortgage. That aside,
my second, and more pertinent question is: Would the insurance on the property still be valid should I be living in it on a buy-to-let mortgage?

Thanks in advance for your knowledge

Lilla_D

Raising money on an unencumbered (mortgage free) property for home improvement purposes with sufficient rental cover should be fine, subject to T&Cs like your income, the property itself, etc. But in theory you're right, it should not be an issue.

If you move in next year, you should inform the lender and change your insurance. Landlord insurance is not quite the same as a resi building and contents insurance, as the risk levels and the types of events they cover are different. Not sure what they would say re the BTL mortgage, but they don't normally ask what type of mortgage you have on the property. Maybe someone else had this scenario before.