New Mortagage with permission to let

Kimwong1

Hi,

I am just looking for some advice, I currently have a residential mortgage with permission to let which I have been renting out for the past 3 years. I currently live in rented accommodation as I have been moving around quite a bit over the years but I now want to settle down and buy a property. Do I need to convert my permission to let to a buy to let in order to get another residential mortgage?
Also how does having two mortgages affect how much I can borrow?

Thanks

kingstreet

No.

Many lenders will offer an onward residential mortgage without impact on affordability from your CTL as long as it's considered self-funding on the new lender's formula.

sarah69696pink

I recently did this - it depends how much LTV you have on the property you let and how much income you get from it.
In order to enable me to take a much larger mortgage for my new property I had to put my BTL on interest only to show it was easily affordable from rental incoming and also affordable if I had no tenant. I am able to overpay quite significantly without penalty though so it works well for me.

Kimwong1

The Nationwide website states this: If your property is already let, you can’t take further borrowing, switch to a new Nationwide product, change borrower or change your mortgage term. Does this mean I am stuck with the mortgage I already have?

G_M

you can’t .....change borrower.....

Makes no sense.

You are never stuck with the mortgage you already have.

I take it your current (CTL) mortgage is with N/Wide. There is nothing stopping you paying it off and taking out a BTL mortgage with another lender (you may have to pay an early redemption penalty if appropriate).

I assume the restriction against taking further borrowing applies to the current property/mortgage (ie releasing equity from your let property). It does not stop you borrowing against another property.

kingstreet

Kimwong1 wrote: »

The Nationwide website states this: If your property is already let, you can’t take further borrowing, switch to a new Nationwide product, change borrower or change your mortgage term. Does this mean I am stuck with the mortgage I already have?

All this applies to the mortgage on the let property.

What EXACTLY are you trying to do/achieve?

silvercar

Kimwong1 wrote: »

The Nationwide website states this: If your property is already let, you can’t take further borrowing, switch to a new Nationwide product, change borrower or change your mortgage term. Does this mean I am stuck with the mortgage I already have?

This is all about your current mortgage on your current property.

So you can't borrow more on that mortgage on that property, you can't switch to a new nationwide product (so will be stuck on their SVR), can't add or drop a new person as borrower and you can't change the length of the mortgage.

For your new residential property, you can do what you want as that mortgage will come with its own terms.

Kimwong1

Thanks everyone, that has cleared things up a bit.

Kingstreet, I really just want to know if I apply for a residential mortgage for a new property (not the one being let out) what are my options with my mortgage for my let property. From what I understand of everyones post I can either leave it as it is with Nationwide on a permission to let or change it to a buy to let with a different lender?

Sorry, I am very new to all this buying/selling/renting.

kingstreet

Sorry, I assumed you were concerned about the mortgage for the purchase, not the CTL.

It seems you have your answers about the CTL from the lender which holds the mortgage.

You can accept what Nationwide says, or you can remortgage to a formal BTL product if that would suit you better.

Either way, all the new lender for the residential wants, is to see the let is self-financing.

Zizou

You can ask your bank for permission to have lodgers and this way you avoid paying buy to let interest which is bit higher than residential one and tax on your earnings, and then you can rent it out as long as you have letters coming which is on your name e.g. bills, council tax etc, or change it to buy to let mortgage but then you have to pay 20% tax on your earnings!

kingstreet

Zizou wrote: »

You can ask your bank for permission to have lodgers and this way you avoid paying buy to let interest which is bit higher than residential one and tax on your earnings, and then you can rent it out as long as you have letters coming which is on your name e.g. bills, council tax etc, or change it to buy to let mortgage but then you have to pay 20% tax on your earnings!

You have to pay tax on your earnings regardless of what type of mortgage you have. The OP already has consent to let, so the lodger thing is redundant.