Buy to Let Military

Helskelly

We began remortgaging Jan 2016 and completed 7 March 2016.
We were directed into a Buy to Let mortgage, as we Rent out that property. We chose a 5 yr fixed rate. My husband is Military.
Here is my question: I have recently been told the military covenant agreed with the banks/building societies Jan 16 that military personnel were exempt from having to take BTL mortgages because of the job. Can anyone confirm?
Next: we are tied in to this fixed rate till 2021 surely that is unfair if the above is correct. As the interest in BTL is generally higher.
Would we have a case to change the mortgage or reclaim unfair interest rates?
My husband is a military service person and we live as a family in SFA provided housing. We move every 20-24 mths all over the uk & abroad. Never been posted closer than 170 miles (3.5 hr drive) to our house. So renting our house in the far North of Scotland was a necessity. Thx

davidmcn

Helskelly wrote: »

I have recently been told the military covenant agreed with the banks/building societies Jan 16 that military personnel were exempt from having to take BTL mortgages because of the job. Can anyone confirm?

Google says: https://www.gov.uk/government/news/banks-offer-better-deal-on-mortgages-for-armed-forces-personnel

Don't know who gave you the mortgage advice or if you were already with one of the named lenders? Also not clear from that press release when the lenders actually put the policy into place - I would guess it wasn't rolled out immediately. So it's possible the advice you were given was correct at the time.

Next: we are tied in to this fixed rate till 2021 surely that is unfair if the above is correct. As the interest in BTL is generally higher.
Would we have a case to change the mortgage or reclaim unfair interest rates?

I suspect it's more a question of a complaint to whoever gave you advice, doubt you'll get out of the current deal (unless it's your current lender who gave you duff advice)

kingstreet

Lenders have allowed forces personnel to buy and let their only property for a lot longer than two years. I can think ten-fifteen at least.

You need to complain to whovever "directed you" as you may have been badly advised, if that person was authorised to give advice.

silvercar

You can't complain to the lender that the rate is unfair or that the fix is too long. That is a choice you made. You can complain to whoever directed you to that choice.

Trying to think of an analogy. Say you took advice from a heating expert. He suggested electric radiators. You can't complain to the radiator installer that a gas boiler would have cost you less to run, but you can complain to the heating advisor.

martinbuckley

I was in the military and had a mortgage on a property. When I was moved 600 miles and I was forced to let the property, I wasn't charged a BTL rate.

I think the difference may be that I lived in my property and was forced to move, whereas the OP has chosen to buy a property and rent out that they have not lived in and rented out from the start.

bertiewhite

JSP752 might help, although that's more to do with allowances and when you can claim them. It does explain some of what Martin is referring to though, like qualifying circumstances.

I will be in the same situation in a few months time so I will watch this with interest.

Helskelly

Thanks everyone. Just to clarify. I am the service persons dependant. I owned and lived in the house for 15 yrs. Then married a soldier & had kids. The house was rented for 6 yrs while we constantly travelled as a family for his work. I myself owned this house at that time. Up until 2016 when we remortgaged, putting my husband the service person onto the title deeds.
Neither my husband or I were aware of the military covenant rule on BTL mortgages, but it was obvious we were military, as he had to provide a job description. I might have thought either the lender or the adviser would of known.
Thanks everyone. Interesting thoughts coming back.

kingstreet

martinbuckley wrote: »

whereas the OP has chosen to buy a property and rent out that they have not lived in and rented out from the start.

Day one letting is what I was referring to as being possible for years.

Helskelly

Hi everyone. So here is a quick update. Maybe this might help others.
I called the mortgage provider who were great. They said:
We should never of been advised a BTL. That it was an error on our advisors side. It's in the terms & condition with relation to how to apply for military personel and civilians who qualify. That 1st you apply for a residential mortgage, with a request to let explaining the reasons why.
But still they would do what they could for us. After they spoke to their complaints section, they then advised that no help or correction could be offered by them, Given the fault lies with the advisor. Had it been a mortgage organised direct between ourself & the mortgage company then yes, they would be at fault.
During this time I also spoke and updated our advisor. Who was also great. He went about finding as much info as possible about it. He did admit not knowing about the military covenant.
I explained I just wanted assurity everything was correct & we hadn't missed out on something.
Today he sent me this, which I feel has reassured me:

OK had some information back from Nat West.
Basically you can do the mortgage anyway that fits now. Either as a buy to let or a residential mortgage. Most are completed as a buy to let as you can still do a buy to let as interest only. But you cant on a residential. As a residential mortgage the majority of application would fail affordability as they use this as a second home. So costs for your own home … and the second home need to be taken in to account. This would be backed up by bank accounts showing the cost for the army house. A calculation is then made in relation to the second property (if it is not rented). If this is acceptable then they will decide if a residential mortgage is available to you or not.

To complete a mortgage as a residential you need to complete the mortgage on a residential basis and then apply for a consent to let. This will be considered IF you can confirm it is your intention to move in to the property, when you leave the army. There is no guarantee this will be accepted. If it is accepted you would be subject to the buy to let costs with the lender… At the end of the fixed term you move to the buy to let rates…..

Nat West have confirmed to me the difference in the rates in December 2015 are 0.2% cheaper for residential to Buy to let rates. This is negligible on a monetary basis, in your case. But could make a difference it the mortgage had been higher… But if it had been higher then it would potentially decline on affordability for having 2 properties.
Its swings and roundabout really.


I hope this might help others too. Helskelly x

ArielBell

Can anyone offer some advise on this... We are with Halifax, I called to say we are renting the property out due to my husbands re-deployment. However they have said we cannot let our property out as the Loan to Value is at 87% not 75%. Now i'm really worried, we didn't think it would be a problem and have made all other arrangements to move.
They advised me to submit a request online for it to go to the 'back office team'. I am hoping to god its all ok or we are screwed.
Has anyone had the same experience?
Thanks
Lizzie

kingstreet

From Halifax criteria;-

Consent to let

If the customer is still letting the property, due to our policy rules, the request cannot be processed unless the customer is a HM forces employee - regardless of whether the HM forces employee is still letting the property or not.

An application for consent to lease can be considered for armed forces personnel on their intended main residence even where it is known that immediately following completion, the property is to be let.

A consent to lease would not normally be considered until the mortgage has been in place for six months but armed forces personnel are exempt from this rule.

The criteria is silent on the loan to value.