Buy to let mortgage/residential mortgage 10 March at 4:38PM in Mortgages & endowments 2 replies 134 views

froggery

Hi all

Sorry, I didn't know if this was better to go in the mortgage section or house buying section, so apologies if it's in the wrong place.

DH and I are looking to buy a property that is coming up on the market any day now, we know how much they want etc but they'd rather go via estate agent - fair enough..

We want to purchase as a retirement investment and so that my elderly parents can be round the corner from me at some point in the future if they needed to move into a smaller property for any reason.
There is also another property coming onto the market in the next 6 months that we love, and ideally we would like to keep both properties and rent out the first one.  We would however move to the first one for a few months to get it up to spec as it needs a bit of work.

The plan was to apply for a BTL mortgage straight away and then we wouldn't have to worry about moving it to a BTL when we move/fees etc

However, I've been reading up on BTL mortgages and most places state you can't live in a BTL.... so we would have to get a residential mortgage.  I've also read that you can't transfer to a BTL mortgage until you've lived in the property for 6 months to a year?   If we get a fixed rate residential mortgage there would be fees for ERC as we would technically have to get rid of that product and move to a new one?

I'm also concerned about the credit score/check if we are buying two properties in such a short space of time.

Has anyone ever done this? What would be the most sensible way to go about it, does anyone know?

dimbo61

Well you can get a residential  mortgage which is not fixed.
Trackers are available  with No ERC s for when you want to move onto your next home and rent out the one you hope to buy.
Your right you can't buy a property with a BTL mortgage and move yourself into it.
Now has the property  got a working kitchen and bathroom ? Needed to get a mortgage 

Annisele

You're right that if you take a standard BTL mortgage, you won't be able to move into the property yourself. But you won't be able to move your parents into it either - most (not all) BTL mortgages prohibit letting to close family members.

It sounds as though you might need:

• Standard residential mortgage (/regulated mortgage contract) for the period you want to live in the house; then
• Unregulated BTL for the period where you want to let to unrelated people; then
• Regulated BTL for when you move your parents in.

Regulated BTLs have different critieria than the usual kind - but they may also require you to show that you can afford the mortgage on both your own property and the BTL without taking into account any income you might receive.

Of course if you don't need a mortgage on the let property - perhaps because you can pay off the mortgage by the time your parents need to move in, or because you can increase your mortgage on the property you live in - this might not be a problem. And depending on how old your parents are, regulation and mortgage criteria might have changed a whole bunch by the time you need to change the mortgage anyway.