BTL mortgage to pay off residential mortgage. Is this allowed?

Edtough

My parents took a residential mortgage on their house to raise capital for an investment. My Dad will soon be 75 and the mortgage needs to be repaid; the current lenders will not lend over age 75. Paying off the mortgage isn't a problem, but if possible we'd like hang on to the money and pay off the residential mortgage by taking out a BTL mortgage on a rental flat of his.


Technically the rental flat is in my mother's name and she is only 71, so has a few years borrowing left in her.


Will lenders accept borrowing with a BTL mortgage to pay off a residential mortgage? Or should we just give the reason for borrowing as "raising capital"?

silvercar

Whatever the reason, you need to consider how you will repay the BTL mortgage. Lenders usually require the borrower to have an income of £25k+ to grant a BTL mortgage.

csgohan4

need a broker to fully assess them, but BTL has strict critera as above being one of them

Edtough

Yes I know all that. I'm asking specifically about borrowing reason please.

glosoli

My understanding is that strictly speaking, it is considered debt consolidation, as the borrowing which is being repaid by the buy to let equity is not currently secured to the buy to let currently by way of first legal charge.

For the bank I work for yes it is an option to do this, but it will vary widely lender to lender on their definition of it and whether it's something they can accept.

Thrugelmir

Capital raising is what you are doing not the purpose for the funds released.

Edtough

Thanks guys. Think we'll stick with "raising capital", then.

glosoli

I think you missed his point, every further borrowing application is raising capital, they will ask what you are raising capital for, and when you say to repay another mortgage, it is down to their criteria as to whether it is something they can accept and what they would deem the application to be classified as.

Edtough

Ah yes I see. Would be nice to know what the lenders accept before putting foot in it.

glosoli

Ah I see. Without intending to sound like an a*rse, this would otherwise be known as mortgage fraud, which doesn't tend to go down well around here.

Judging by the few facts known, I would be surprised if any of this got off the ground to begin with.

Edit - this post was initially in response to the above, which has since been edited from saying "Capital raising to buy another buy to let".