Buying a Second Home, Renting the first

seandc

Hi all,

I have a mortgage on a flat which I was living in but decided to rent it out in March 2018 when I moved in with my partner. My partner does not own her flat so we have been paying rent, and are looking to buy in 2019.

I had always planned to sell the flat to part-fund the new mortgage with my partner but I spoke
with a friend who advised that I did not need to sell but could instead borrow more money from my mortgage provider and keep both properties (renting the first and living in the second).

This seemed appealing as I didn't think this would be a great time to sell with Brexit etc. However I spoke with my mortgage provider (HSBC) about this who said that it would not be possible. They told me the only way they could lend more money would be if I were living in my property for at least six months and then borrowed money to buy and rent out the second.

Does anyone have any experience or knowledge of this? Is it just HSBC or would this be a stance taken by other mortgage providers as well?

Any and all feedback would be appreciated.

Thanks

Bossypants

It's theoretically possible, but whether you can find a lender/lenders to support it will depend on the details, including loan to value and projected rental income on the proposed rental, affordability on the new purchase, etc. You also need to be prepared for the higher stamp duty.

Best to read through G_M's excellent guide to becoming a landlord in the first instance, to decide whether this is really for you. If so, find a good broker to run the numbers with.

00ec25

so like thousands before you (and doubtless 1,000s still to come) you are settling down with the GF and think you can have your cake and eat it by retaining your current property and becoming a LL, yet don't even know about buy to let mortgages yet?

go speak to a mortgage broker and get some real info before you waste your time on further dreaming before you even begin to then find out what being a LL actually requires

BTW - tenants rent properties
landlords LET properties, they don't rent them (in the sense you mean)

G_M

Tenancies in Eng/Wales: Guides for landlords and tenants This thread is intended to provide information to both landlords and tenants relating to Assured Shorthold Tenancies (ASTs) in England and Wales.

Topics covered:

* Repairing Obligations: the law, common misconceptions, reporting/enforcing, retaliatory eviction & the new tenant protection (2015)

* Deposits: payment, protection and return

* Ending/renewing an AST: what happens when a fixed term ends? How can a LL or tenant end a tenancy? What is a periodic tenancy?

* Rent increases: when & how can rent be increased?

* Repossession: what if a LL's mortgage lender repossesses the property?

* New landlords: advice, information & links

* Letting agents: how should a landlord select or sack?

Pixie5740

seandc wrote: »

Hi all,

I have a mortgage on a flat which I was living in but decided to rent it out in March 2018 when I moved in with my partner. My partner does not own her flat so we have been paying rent, and are looking to buy in 2019.

I had always planned to sell the flat to part-fund the new mortgage with my partner but I spoke
with a friend who advised that I did not need to sell but could instead borrow more money from my mortgage provider and keep both properties (renting the first and living in the second).

This seemed appealing as I didn't think this would be a great time to sell with Brexit etc. However I spoke with my mortgage provider (HSBC) about this who said that it would not be possible. They told me the only way they could lend more money would be if I were living in my property for at least six months and then borrowed money to buy and rent out the second.

Does anyone have any experience or knowledge of this? Is it just HSBC or would this be a stance taken by other mortgage providers as well?

Any and all feedback would be appreciated.

Thanks

That is certainly HSBC's BTL lending criteria:

Eligibility criteria
To apply for our Buy to Let mortgages, you'll need to meet our Borrower and Buy to Let mortgage eligibility criteria:

Minimum annual salary of £25,000
You must have owned and lived in your existing property for at least 6 months
The property must be in the Channel Islands or Isle of Man
The maximum loan to valuation (LTV) is 75%, subject to loan amount
Properties must be let under a suitable tenancy agreement or let for business purposes
The property must not be a House in Multiple Occupancy (HMO), e.g. a student let
All Buy to Let mortgages are subject to underwriting and lending criteria that may be varied from time to time
Additional Borrowing is available to existing HSBC Buy to Let mortgage holders looking to borrow more on their existing rental property, however total lending must not exceed 75% loan to value (except for additional borrowing taken for debt consolidation purposes. The maximum borrowing amount for this is £30,000 with a maximum 60% loan to value).
We are not able to provide a Buy to Let mortgage if you are classified as either a Professional Landlord or a Portfolio Landlord. A Professional Landlord is a person(or persons in the case of the joint mortgage) with more than £2,000,000 in buy to Let borrowing across all lenders or where more than 50 per cent of their total gross annual income (joint income) is from rental income. A Portfolio Landlord is a person( or persons in the case of a joint mortgage) with four or more buy to let mortgaged properties in total at the end of the application.

Source: https://ciiom.hsbc.com/mortgages/buy-to-let/

Not every lender will take the same stance as HSBC so consult a mortgage broker to find out your options.

Bossypants

HSBC is funny about BTL's in general, though. I've done what OP is proposing with Barclays and was about to do it with Natwest until plans changed, neither batted an eyelid.

OP may be stuck with some exit fees from HSBC if they need to change lender, of course.