Can I buy a buy to let if I'm in rented accommodation?

Holidaymaker2019

Hi,
Apologies if this question is in the  wrong place, I was not sure where to post for advice.

We live in an area that makes buying a family home out of reach, just because there are a lots of second homes here etc. We rent because I have children and they have all the links they need for college and work etc. We would like to buy a small home for us to retire to, which we could rent out until we are free of the children. I was previously advised that I couldn't have a buy to let mortgage if I didn't own the home I live in, is that still the case? Any advice would be welcome, thank you in advance.

MaryNB

A lot of lenders require you to own your own home first. Speak to a broker who will help you find a lender that may cater to your needs. I believe there are a few that cater to FTBs but you may be subject to more stringent requirements. Generally BTL mortgages require a 25% deposit and rent that covers 125% of the mortgage payments.

The work and responsibility involved in being a landlord is a whole different story though. What happens if they stop paying rent and it takes months to get an eviction order from the court? Will you still be able to afford your rent and mortgage? You'll need to sort an EICR, EPC, GSC, deposit protection, and possibly HMO licence. Letting agency fees if you don't want to do all the paperwork (they can pick up some of the work but you will still be held responsible if something goes wrong). 

theartfullodger

Some lender might agree: Try a couple of whole-of-market B2L brokers.. (I don't own the property I live in, but have a B2L mortgage on a student let to my age 80. And used to have two more mortgages other properties as well).  Think they wanted income of at least £25k and assets (I have, retired, pensions etc).

Life ain;t fair: What Proudhon said.

Holidaymaker2019

MaryNB said:

A lot of lenders require you to own your own home first. Speak to a broker who will help you find a lender that may cater to your needs. I believe there are a few that cater to FTBs but you may be subject to more stringent requirements. Generally BTL mortgages require a 25% deposit and rent that covers 125% of the mortgage payments.

The work and responsibility involved in being a landlord is a whole different story though. What happens if they stop paying rent and it takes months to get an eviction order from the court? Will you still be able to afford your rent and mortgage? You'll need to sort an EICR, EPC, GSC, deposit protection, and possibly HMO licence. Letting agency fees if you don't want to do all the paperwork (they can pick up some of the work but you will still be held responsible if something goes wrong). 

Thank you for taking the time to give your advice, I will look into that.

Holidaymaker2019

theartfullodger said:

Some lender might agree: Try a couple of whole-of-market B2L brokers.. (I don't own the property I live in, but have a B2L mortgage on a student let to my age 80. And used to have two more mortgages other properties as well).  Think they wanted income of at least £25k and assets (I have, retired, pensions etc).

Life ain;t fair: What Proudhon said.

theartfullodger said:

Some lender might agree: Try a couple of whole-of-market B2L brokers.. (I don't own the property I live in, but have a B2L mortgage on a student let to my age 80. And used to have two more mortgages other properties as well).  Think they wanted income of at least £25k and assets (I have, retired, pensions etc).

Life ain;t fair: What Proudhon said.

Thank you for your advice, I really appreciate it.

K_S

Holidaymaker2019 said:

Hi,
Apologies if this question is in the  wrong place, I was not sure where to post for advice.

We live in an area that makes buying a family home out of reach, just because there are a lots of second homes here etc. We rent because I have children and they have all the links they need for college and work etc. We would like to buy a small home for us to retire to, which we could rent out until we are free of the children. I was previously advised that I couldn't have a buy to let mortgage if I didn't own the home I live in, is that still the case? Any advice would be welcome, thank you in advance.

@holidaymaker2019 At least in the last 10 years, it was never the case that you couldn't get a BTL if you didn't own the home you lived in.

There are a few mainstream lenders who will consider letting to non owner-occupiers. If you are both FTBs (never owned a property ever), that pool becomes slightly smaller.

saajan_12

Holidaymaker2019 said:

Hi,
Apologies if this question is in the  wrong place, I was not sure where to post for advice.

We live in an area that makes buying a family home out of reach, just because there are a lots of second homes here etc. We rent because I have children and they have all the links they need for college and work etc. We would like to buy a small home for us to retire to, which we could rent out until we are free of the children. I was previously advised that I couldn't have a buy to let mortgage if I didn't own the home I live in, is that still the case? Any advice would be welcome, thank you in advance.

What's the benefit in buying now rather than when you actually retire / when kids move out? 

If its as an investment -> can invest in a stock portfolio, even one focused on real estate. That would mean 
* no hassle of tenants / LL responsibilities (eg repairs, protecting deposits, advertising, etc etc)
* option to choose house that suits at the time, in case your preferred taste / area / size of house changes.
* same or easier to liquidate and buy a house when you're ready, vs evicting tenants via court

AdrianC

There are two questions in one here.

1. Will anybody give a non-home-owner a BtL mortgage? Some will. Many won't, because there's the perception that the borrower may be unable to get a residential mortgage for some reason so using it as a back-door.

2. Is it really wise to start a residential lettings business in your position?

When you retire, will you be able to remortgage the property from a BtL mortgage to a residential one?

grumiofoundation

saajan_12 said:

Holidaymaker2019 said:

Hi,
Apologies if this question is in the  wrong place, I was not sure where to post for advice.

We live in an area that makes buying a family home out of reach, just because there are a lots of second homes here etc. We rent because I have children and they have all the links they need for college and work etc. We would like to buy a small home for us to retire to, which we could rent out until we are free of the children. I was previously advised that I couldn't have a buy to let mortgage if I didn't own the home I live in, is that still the case? Any advice would be welcome, thank you in advance.

What's the benefit in buying now rather than when you actually retire / when kids move out? 

If its as an investment -> can invest in a stock portfolio, even one focused on real estate. That would mean 
* no hassle of tenants / LL responsibilities (eg repairs, protecting deposits, advertising, etc etc)
* option to choose house that suits at the time, in case your preferred taste / area / size of house changes.
* same or easier to liquidate and buy a house when you're ready, vs evicting tenants via court

If OP isn't planning on buying a house until they retire they would then also have the option of investing more efficiently via pension or get the 25% bonus from stocks and shares lifetime ISA* (if under 40).

*Edit: must be under 40 to open, can contribute up to age 50.

lonibra

OP - being a renter won't stop you from getting a BTL mortgage. You might not qualify on all criteria but there are a decent number of banks who are fine with it. You just need a good MB to match you up.