buy to let mortgage on shared ownership

CorineUK

Hi,

I purchased my studio flat in 2006 with the help of a keyworker loan, but as I am now married with a child it is too small and and also needed to move area for work.

It was put on the market august of 2018, and as it has a keyworker loan attached to it I need to return the same percentage to loan company as I took to buy it. I borrowed 37% of mortgage and so need to pay back 37% of valuation or if higher the final sale price.

The problem is that the valuation price must be set by a chartered surveyor, and they have over valued it it from the start.

I have only had 3 offer since august, the first two had to be turned down as the valuation was £30,000 more than the offers and I would still have to payback 37% on valuation not sale price.

Since then the market has been very difficult for studio flats and prices have dropped, I changed surveyor and final got a realistic market valuation and was able t accept an offer which was £45,000 less than the original surveyor valuation.

Unfortunately the buyer backed out at the last moment, and now after 11 months of paying mortgage, service fee, council tax and bills on a property I don't live in, whilst also paying to live in a rented house I am financially in a very difficult position.

Without a buyer coming forward very quickly I am looking at getting a buy to let mortgage and renting till the market settles down when political situation is better.

The current valuation is £210,000 I can get £900/950 a month rent and will need a mortgage of approx £145,000 to pay loan company and remaining mortgage.

Any advice and recommendations for buy to let mortgage advisor will be appreciated.

Thanks

sal_III

The first thing to check is if the Shared ownership scheme you used even allows letting out of the property, most likely it doesn't.

[Deleted User]

I read it slightly differently that OP wants to use a BTL mortgage to buy out the full 100% and pay off the shared ownership aspect. Effectively giving a full owned BTL.

If its the case of you wanting to rent out as shared ownership then probably not going to happen

If its that you want to buy it out and then rent it i suppose you need to check with them that they are ok with this (some dont allow full ownership at all). If they are then it sounds like a decent case just on the numbers. Obviously youd need to speak to a broker and firm things up but in theory its fine.

Certain things like not owning your own residential home work against you but there are lenders out there who would support it (again in theory as dont know enough about your circumstances)

CorineUK

Hi,

currently as it stands i can't rent which is why I am looking into BTL mortgage to buy back/pay off loan for the shared ownership so I have full ownership.

As far as I am aware the loan company are fine with repaying the loan so long as it is calculated against chartered surveyors valuation.

Just getting a remortgage on my current mortgage to pay off the loan is not feasible, (they would give consent to rent if not shared ownership) as they will not take into account any rent i would receive from the property, and with the fact that my finances are maxed out due to paying for 2 properties means they would to give a remortgage.

As I understand it a BTL mortgage is not based on my finances, but monthly rent amount and deposit/equity in the property?

thanks

kingstreet

Are you sure this is shared ownership?

You would normally own a portion of the property and pay rent to a Housing Association on the remainder.

Mentioning a loan makes it sound like shared equity where you own 100% of the property and there is a second charge over the property for the loan.

[Deleted User]

CorineUK wrote: »

Hi,

currently as it stands i can't rent which is why I am looking into BTL mortgage to buy back/pay off loan for the shared ownership so I have full ownership.

As far as I am aware the loan company are fine with repaying the loan so long as it is calculated against chartered surveyors valuation.

Just getting a remortgage on my current mortgage to pay off the loan is not feasible, (they would give consent to rent if not shared ownership) as they will not take into account any rent i would receive from the property, and with the fact that my finances are maxed out due to paying for 2 properties means they would to give a remortgage.

As I understand it a BTL mortgage is not based on my finances, but monthly rent amount and deposit/equity in the property?

thanks

Some BTL's assess personal finances completely, some look more at the property rental cover. Some require you to own a residential, some dont, some require a much higher rent than others. I dont do a lot of BTL where i am at the moment but on the face of it it sounds like plausible.

Get a recommendation for a broker to crunch the numbers for you and outline best advice. Also do some reading to see if you want to be a landlord. It is a bit of a headache so make sure you know what you're responsibilities are

haras_nosirrah

I have done a number of btl remortgages to staircase out a former shared ownership property

It can be done subject to the numbers stacking up

Do you own another property elsewhere or are you renting it? A number of lenders would want you to have an onward residential mortgage

CorineUK

kingstreet wrote: »

Are you sure this is shared ownership?

You would normally own a portion of the property and pay rent to a Housing Association on the remainder.

Mentioning a loan makes it sound like shared equity where you own 100% of the property and there is a second charge over the property for the loan.

Hi,

I believe you are correct in that it is a shared equity, i tried to tell my solicitor that it was not shared ownership, but a keyworker loan was taken out to help with the purchase.

The loan must be paid off when selling the property or if no longer a keyworker.

I now know the correct term is shared equity, this will help in the future.

Thanks

CorineUK

haras_nosirrah wrote: »

I have done a number of btl remortgages to staircase out a former shared ownership property

It can be done subject to the numbers stacking up

Do you own another property elsewhere or are you renting it? A number of lenders would want you to have an onward residential mortgage

Hi, no i don't own another property, I was hoping that on selling I could use the available equity after loan and outstanding mortgage was cleared as deposit for buying a house in the area i am now living.

thanks

haras_nosirrah

the issue you will have is that you need to leave 25% equity behind

add on the 3% stamp duty surcharge

you are going to struggle to have a deposit for anywhere else if you convert this to a buy to let

CorineUK

Hi, the loan company have no issue how we pay the loan off so buy to let no issue.

Yes it is looking tight for getting a deposit, I was hoping to have a £45,000 deposit if flat sold for property of around £200,000, looks like I will have to rent for a couple of years till market settles and then look to sell the flat.

Would prefer to sell, but at the moment going the BTL route is going to be the only option.

A question on stamp duty, I am assuming that i will still have to pay 3% even though it is my own property I am getting BTL mortgage on?

Going to do some research on finding a BTL broker now.

Thanks