Consent to let first property... then buy second property

rosa246are

Hi 

I would like your kindly ask for advice. I have a 5 year fixed mortgage, currently im in year 3 of the 5 year term.  So I have been living at this property however I would now like to get another property to live in closer to my workplace and closer to my family. I have noted that as this is a 5 year term its impossible to switch to buy to let.  I would like to therefore get a consent to let for the remainder of the  2 years then apply for morgage in order for me to get my second property.. I would like to therefore rent out the first property (its residential) 

So my question is would the bank be happy to give me a loan for second property despite me having a consent to let.... 


Thank you 

Look forward to hearing any answers and advice. 

Regards, 

Slithery

rosa246are said:

So my question is would the bank be happy to give me a loan for second property despite me having a consent to let....

If you can actually afford it then I don't see why not.

What did your current lender say when you asked them?

rosa246are

Slithery said:

rosa246are said:

So my question is would the bank be happy to give me a loan for second property despite me having a consent to let....

If you can actually afford it then I don't see why not.

What did your current lender say when you asked them?

Hi Thank you for your comment.  well i have spoken to a broker who said i would need higher salary than i have now to afford two properties. therefore my option was to just do consent to let until 5 year fixed is over then apply for a new mortage for a second property. therefore one being consent to let where i have a loan from a bank - i would move out. ... then the second property i would buy as residential. therefore the first property would be paying for it self with tenants. 

i only ask this as i was wondering if the bank would allow me to get a loan if i have  a consent to let on the first property 

regards,

Slithery

rosa246are said:

I have noted that as this is a 5 year term its impossible to switch to buy to let.

It's not impossible at all. You just need to pay the ERC before remortgaging to a BTL product.

rosa246are said:

...therefore the first property would be paying for it self with tenants.

Just because you have tenants doesn't mean the the property will 'pay for itself'. You need to also take into account the additional 3% stamp duty, the tax on the rent, additional CGT when you sell the property, updating the property to the legal standards for a rental, having to pay the mortgage if you end up with dodgy tenants that don't pay rent for a year that you can't evict etc etc....

Have you done an accurate financial plan that takes into account all of these as well as the dozens of other things that I haven't mentioned before deciding that starting a new residential lettings business is a good idea?

hazyjo

Couldn't you just port it and buy elsewhere? Not sure if your aim is to actually have a rental property, or if you're looking for a way to avoid the penalty on your current property (in which case, that seems a little extreme).

Rambosmum

I've a friend who has done this and yes, it's possible. But it's been a nightmare for her. 

She bought property 1 on a residential mortgage and got consent to let whilst in the fixed term. The rent didn't quite cover the mortgage once taxes and fees were taken out, she was about £60 short - doesn't seem much BUT it was too much to allow her to get a BTL mortgage once the fixed term was up. 

By the time the fixed term was up on property 1, she had bought property 2 on a residential mortgage and was living in it, had tenants in property 1 so had 2 options - remortgage property 1 on BTL or remain on the current mortgage with consent to let. The rent wasn't enough to get a BTl mortgage (and her salary not enough to have 2 mortgages either) so she had to stay on the original consent to let mortgage but on the variable rate - which has just gone up by £75 already this year, plus the increase last year when it moved from fixed rate to variable rate . That £60 shortfall in the rent is now £200 which she has to pay out of pocket every month and is risking her being able to remortgage house 2, where she may end up being on a variable rate too. 

She can't simply increase her tenants rent, legally you can only do that at set periods and the rent is inline with the local area, put it up much more and she risks a vacant property. She's now desperately trying to sell. 

canaldumidi

Post 7: New landlords (1):advice & information :see links in next post

Post 8: New landlords (2): Essential links for further information

Post 9: Letting agents: how should a landlord select or sack?

steve866

I read another thread where someone ported their residential mortgage from property (A) to the new properly (B) then took out a new BTL mortgage on property (A). This all happened simultaneously when the completely on property (B). I had no idea this was possible to be honest. 

Bluebell1000

You might be looking to get a let to buy interest only mortgage on your existing house, and port your current mortgage to your new house to avoid ERC. I would be cautious about taking on responsibility for a rental property some distance from where you live though; even with a managing agent you will need some visits unless you are willing to throw money at it for doing any small jobs 

GrumpyDil

It's all possible. I did this years ago but it was when it was possible to get interest only residential mortgages so the rental income more than covered the mortgage payments.

Problem with a repayment mortgage is it us far less likely that the income will cover the mortgage.

I would have thought option would be to remortgage first property to BTL and port existing to new property. 

But that only holds true if you want the BTL as an investment and can handle all the issues that come along with it. 

Otherwise just sell and port. 

diystarter7

Any lender will lend you anything as long as they were more than covered by your assets should things go wrong and then pull the rug from under you.