Mortgage advice - New home plus BTL

Gb54

Hi. I currently own a property with a mortgage and currently rent it out with consent to lease. The mortgage is on the variable rate as I can’t start a new deal with consent to lease.

My circumstances have changed and I’m trying to get advice, with limited success. If anyone could offer any advice I would be greatly. Here is what I want to do:

- my current property (I’ll call property 1), with residential mortgage and consent to lease. 

- I want to buy a new property in a different area as my job has moved. I have recently had some inheritance from a family bereavement. And want to use this to but the new property (which I’ll call property 2).
- I want to keep property 1 but know I’ll have to get a buy to let mortgage on that. 

The issue I’m having, is that it doesn’t seem possible for me to do this, ie buy a new property to live in (with residential mortgage) and rent out a property with a BTL. I have only asked two companies and both have said I can’t do this. Surely, there is a way that makes it possible? 

I thought I could transfer my current residential mortgage to the new property and take out a new BTL in the current property, but I’ve been told they can’t convert or change the mortgage. But if I simply move house, I can port my mortgage. Isnt  this effectively what I’m doing, plus adding a BTL? In my head it seems it should be simple but as always it isn’t. Any advice would be appreciated.

K_S

@gb54 Is P1 tenanted and earning an income? Is your current status that of a private tenant? Or you've just got a CTL but are still living in P1? How much equity do you have in P1?

There must be something significant in the background (numbers not stacking up perhaps?) if 2 brokers told you that they can't help.

I don't see anything obvious in your post which indicates that your plan of remortgaging P1 to a BTL and buying P2 using a resi mortgage is not doable.

The porting part is more complicated and depends on the policy of the current lender for P1. Why would you want to port a mortgage that's on SVR and (presumably) has no ERC?

[Deleted User]

If you are on the variable rate then you dont need to port.  You are going to want to:

Remortgage to a BTL mortgage - you need 25% equity in order to do this.  
Take a new residential mortgage for a purchase - you will need at least 10% deposit but up to 25% depending on what lender you go to. 

Its not a hard transaction to arrange as long as the numbers stack up.   Have you spoken to a broker yet? 

lonibra

Sounds like a simple let to buy. You need to find a decent broker. Going from lender to lender is madness as it is highly unlikely that one lender will be the best choice for both the buy to let and residential mortgage.

Gb54

K_S said:

@gb54 Is P1 tenanted and earning an income? Is your current status that of a private tenant? Or you've just got a CTL but are still living in P1? How much equity do you have in P1?

There must be something significant in the background (numbers not stacking up perhaps?) if 2 brokers told you that they can't help.

I don't see anything obvious in your post which indicates that your plan of remortgaging P1 to a BTL and buying P2 using a resi mortgage is not doable.

The porting part is more complicated and depends on the policy of the current lender for P1. Why would you want to port a mortgage that's on SVR and (presumably) has no ERC?

Hi, thank you for the response.

- P1 is tenanted and earning income, tenants have indicated they want to stay for a few years as they are happy and have just started a new family.
- I am currently a tenant. I had a career change and moved to do a postgraduate course and my new job is in this area so that’s the reason for the move. At the moment I am renting.
- equity in P1 is around 55% (I have thought of releasing some of this to add to the inheritance to increase deposit on P2)
- the two people I have spoke to are my current provider and another bank. I didn’t even get to the numbers with either, it was as I was booking the appointment and giving the reason for the appointment I was told they couldn’t do it. I am looking to get an independent broker.
- regarding porting - that’s probably me not understanding the term, I meant just move a residential mortgage to the new property; I would look to get a better deal.

thanks again.

Gb54

Deleted_User said:

If you are on the variable rate then you dont need to port.  You are going to want to:

Remortgage to a BTL mortgage - you need 25% equity in order to do this.  
Take a new residential mortgage for a purchase - you will need at least 10% deposit but up to 25% depending on what lender you go to. 

Its not a hard transaction to arrange as long as the numbers stack up.   Have you spoken to a broker yet? 

Hi, thank you for your reply.

- I was told I couldn’t remortgage a residential mortgage to a BTL, that’s why I thought I’d have to move that mortgage to property 2 and get a new BTL.

I have a lot of equity in P1 plus a good deposit for P2; my salary would cover bother mortgages in the unlikely event the tenants of P1 leave. This is why I couldn’t understand why I was told no. Credit history is great.

I have only spoken to my current lens and one other bank.

Gb54

lonibra said:

Sounds like a simple let to buy. You need to find a decent broker. Going from lender to lender is madness as it is highly unlikely that one lender will be the best choice for both the buy to let and residential mortgage.

Hi, thank you for your reply.

what is the difference between let to buy and buy to let? Sorry, I might be missing the obvious here.

K_S

Gb54 said:

K_S said:

@gb54 Is P1 tenanted and earning an income? Is your current status that of a private tenant? Or you've just got a CTL but are still living in P1? How much equity do you have in P1?

There must be something significant in the background (numbers not stacking up perhaps?) if 2 brokers told you that they can't help.

I don't see anything obvious in your post which indicates that your plan of remortgaging P1 to a BTL and buying P2 using a resi mortgage is not doable.

The porting part is more complicated and depends on the policy of the current lender for P1. Why would you want to port a mortgage that's on SVR and (presumably) has no ERC?

Hi, thank you for the response.

- P1 is tenanted and earning income, tenants have indicated they want to stay for a few years as they are happy and have just started a new family.
- I am currently a tenant. I had a career change and moved to do a postgraduate course and my new job is in this area so that’s the reason for the move. At the moment I am renting.
- equity in P1 is around 55% (I have thought of releasing some of this to add to the inheritance to increase deposit on P2)
- the two people I have spoke to are my current provider and another bank. I didn’t even get to the numbers with either, it was as I was booking the appointment and giving the reason for the appointment I was told they couldn’t do it. I am looking to get an independent broker.
- regarding porting - that’s probably me not understanding the term, I meant just move a residential mortgage to the new property; I would look to get a better deal.
thanks again.

@gb54 Thanks for the additional information. On the face of it, it seems like a relatively straightforward case for an experienced broker

- Essentially, you want to remortgage P1 to a BTL (potentially taking it up to a 75% LTV interest only mortgage and releasing 30% of equity, of course only if you require it to bring down the LTV on your residential purchase). As you are currently on SVR, there should be no ERC to pay when you remo to a BTL mortgage. There is no logical reason to move the current residential mortgage if that makes sense.

- You also want to make an onward residential purchase of P2 which should be a relatively standard residential mortgage.

- You can either do the above simultaenously or first do the BTL remo and then start looking for a house to buy.

Based on the limited info in your post, assuming the numbers stack up, it should be doable.

[Deleted User]

You may be just hit by bad luck with the lenders you have approached. A lot of lenders dont offer buy to let directly in their branches anymore and some dont allow BTL to be done on a property you have lived in. And some wont lend on a BTL with you not being a current homeowner. 

All in all these are really difficult transactions to find a solution through luck. But they are quite simple for someone who knows what they are doing

lonibra

Use a broker is what K_S and Deleted_User are trying to say without saying as much

dimbo61

You are now running a BTL business and need professional help from a Whole of market mortgage broker who also deals in BTL mortgages.
They will look at the big picture and check your credit file, search for the best BTL mortgage for YOUR circumstances.
It is often easier to get a 5 year fix with a BTL and try and make sure you are allowed to overpay by 10% each year IF you want too.
With the inheritance and some of the equity in your current property you should also be able to get a good deal on your next home.
Be very aware of the Tax changes if your going to be paying higher rate tax