Switching to buy-to-let and move in with family

moongarden

I'm starting to research the possibility of switching to a B-2-L mortgage from a repayment mortgage and would love some pointers for where to research this please?
My concern is rising mortgage rates as I live on my own so am responsible for paying everything. I now have the option of moving in with my sister a 10 minute walk from where I now live and would pay a share of mortgage and bills there but less than half what I am currently paying out. I don't want to take myself off the property ladder as this house is a new build bought off plan as an investment and I intend to sell it around 2026-27 when the market suits. 

The house is worth around £315,000. Current mortgage is for £168,000 so over 40% equity. 
I have good earnings and a decent credit score (just thoroughly checked my credit file) with no other debts so expect that I would be approved for some kind of B-2-L but I don't know what the rules are

housebuyer143

You would convert it to a let to buy or get consent to let with your current lender.

K_S

@moongarden Remortgaging to an interest-only BTL mortgage should be possible, however you will most likely need to move into your sister's place, change all your addresses so your credit files are updated, and then apply to get the widest choice of lenders. If you get paying tenants in before application and have a few months track record, even better.

Trying to remortgage to BTL without a tenant in place or without having moved to your sister's place (only a 10 min walk away) is likely to be quite tricky as the underwriter will need to be convinced that you aren't simply trying to do a backdoor residential to get an interest-only mortgage. I hope that makes sense.

In your place what I would consider doing is get a consent to let from the current lender, get tenants in, move to sister's and then in 6 months time (or when your current fix is coming to an end) look at BTL remortgage options. If by some chance you're with one of the few mainstream lenders that allows you to switch products while on a Consent To Let, you might even want to consider simply staying with that lender to take advantage of that policy.

moongarden said:

I'm starting to research the possibility of switching to a B-2-L mortgage from a repayment mortgage and would love some pointers for where to research this please?
My concern is rising mortgage rates as I live on my own so am responsible for paying everything. I now have the option of moving in with my sister a 10 minute walk from where I now live and would pay a share of mortgage and bills there but less than half what I am currently paying out. I don't want to take myself off the property ladder as this house is a new build bought off plan as an investment and I intend to sell it around 2026-27 when the market suits. 

The house is worth around £315,000. Current mortgage is for £168,000 so over 40% equity. 
I have good earnings and a decent credit score (just thoroughly checked my credit file) with no other debts so expect that I would be approved for some kind of B-2-L but I don't know what the rules are

elsien

Just a technicality, but if you are paying part of your sisters mortgage could that not potentially give you a beneficial interest in her property? Just something for you both to consider if you end up falling out. It does happen.

moongarden

Thank you both for your replies.

K_S said:

@moongarden Remortgaging to an interest-only BTL mortgage should be possible

This is an interesting point as I wasn't planning on interest only. I would like to pay off the mortgage on a repayment basis so my equity continues to grow and I have been doing this through 10% overpayments - I will possibly even consider shortening the term again when remortgaging. My goal is to have sufficient equity that when I retire in 15 years I can buy a suitable house mortgage free.

elsien said:

Just a technicality, but if you are paying part of your sisters mortgage could that not potentially give you a beneficial interest in her property? Just something for you both to consider if you end up falling out. It does happen.

My sister has paid off her mortgage so there is no lender to take into account but this aspect is something I hadn't considered. This shows the benefits of having such a great resource as MSE and the Mortgage Free Wannabes. I don't want to take any interest in her property so we will make sure a proper tenancy agreement is in place for the room rental to protect us both

JMA74

If you arent planning to switch to IO then it may just be easier for you to request consent to let from your current lender.   Which lender is it?  As K_S mentioned, a few lenders will allow you to switch to a new residential mortgage rate when yours finishes even after you have moved out.  BTL rates are slightly higher and usually have higher set up costs so might be a better option financially

simon_or

OP, a capital repayment buytolet mortgage is much harder to make the numbers add up for.

And frankly it's fairly pointless as you can always effectively convert it into a capital repayment mortgage by using the annual 10% overpayment allowance by setting up a regular monthly standing order. That should be plenty to allow you to pay off the mortgage in full in 15 years if you wanted to do that.

moongarden

JMA74 said:

If you arent planning to switch to IO then it may just be easier for you to request consent to let from your current lender.   Which lender is it?  

I'm currently with HSBC. I haven't wanted to contact them until I have worked my head around everything so I will make an appointment with a mortgage advisor today.

jj_43

HSBC,  well they won't give you consent to let given your moving into your sisters house down the road. Assuming you have no experience being a landlord, so why do you think you are suitable? 

loveka

The Consent to Let is your best option. I did this while I was still living in the property, so moved out after I had got consent. After two years they just switched me to a buy to let mortgage.

They may ask for your reason but they don't ask you to prove your reason in my experience. I was moving for work.

moongarden

jj_43 said:

HSBC,  well they won't give you consent to let given your moving into your sisters house down the road. Assuming you have no experience being a landlord, so why do you think you are suitable? 

Do you know what grounds consent to let is usually granted under for that specific lender? 

I have no experience being a landlord but neither does anyone else doing it for the first time which is why I will be engaging the services of a letting agent.
Is there a reason you asked about my suitability as a landlord?