Interest Only to Buy to Let??

Mustbeananswer??

If I were prepared to move out and let my house out would I be able to convert my Interest only Mortgage into a Buy to Let(Interest only).What would the implications of that be please.I have somewhere to go.I have 60k to find on my current Interest Only Mortgage [by November 2023]...my house is on the Market for £145000 but proving a little difficult to sell?? 

MWT

Mustbeananswer?? said:

....I have somewhere to go.I have 60k to find on my current Interest Only Mortgage [by November 2023]...my house is on the Market for £145000 but proving a little difficult to sell?? 

You are going to need to talk to a broker for that as the details of that 'somewhere to go' will determine the likelihood of getting a BTL mortgage... along with the credibility of letting the property at a sufficiently high rental in that location and of course its current condition being suitable for letting...

diystarter7

Hi OP
As above posters and:

First speak to your current lender and see what they say and then work on that via a broker etc.

Thnaks

MWT

Mustbeananswer?? said:

... would I be able to convert my Interest only Mortgage into a Buy to Let(Interest only).

I probably should have been clearer on that point,you will not be able to convert a regulated residential mortgage into a commercial (unregulated) buy-to-let mortgage, so it will be a new product and most likely a new lender, hence the broker conversation.

This isn't like asking the current lender for consent to let, as you need to repay the existing mortgage before November and replace it with a new BTL mortgage...

housebuyer143

You might find if your house is on the market you may struggle to get a BTL mortgage depending on the lender.
If you need to take money out of it to buy your new place then it's classed as a let to buy I believe and a condition can be that the house isn't sstc or on the market. 
If this is the route you want to take, speak to a broker and take it off Rightmove asap.

MWT

There are a lot of issues between here and a BTL mortgage approval, I'd simple suggest talking to a broker before doing anything else, as the sale of the property may still end up as the best/only option so wouldn't be a good idea to take it off the market before getting some qualified advice...

Mustbeananswer??

MWT said:

There are a lot of issues between here and a BTL mortgage approval, I'd simple suggest talking to a broker before doing anything else, as the sale of the property may still end up as the best/only option so wouldn't be a good idea to take it off the market before getting some qualified advice...

There is a good demand for rental properies around here...as only a few can buy.I am 64 and have a few healh issues so would probably qualify for a cheap council flat...which would be fine for me.Id settle for covering the cost of the mortgage (any ideas 60k borrowing ...interest only.....repaytments) and the cost of council renting £450 monthly 

housebuyer143

Mustbeananswer?? said:

MWT said:

There are a lot of issues between here and a BTL mortgage approval, I'd simple suggest talking to a broker before doing anything else, as the sale of the property may still end up as the best/only option so wouldn't be a good idea to take it off the market before getting some qualified advice...

There is a good demand for rental properies around here...as only a few can buy.I am 64 and have a few healh issues so would probably qualify for a cheap council flat...which would be fine for me.Id settle for covering the cost of the mortgage (any ideas 60k borrowing ...interest only.....repaytments) and the cost of council renting £450 monthly 

Doing forget that a second property (or a BTL) counts as savings etc for benefits so you might find yourself ineligible if you currently claim by keeping hold of it. 

gsw55

I would suggest you should first speak with your lender as they may allow you to let the property. Going down the BTL mortgage and becoming a landlord is fraught with problems. Interest  rates for BYTL are more expensive than residential mortgages an there are affordability checks. The mortgage provider may also want to know what experience you have as a landlord and if you don’t tick all their boxes they won’t provide any funds. The rental market is challenging at the moment for both tenants and landlords. I know from first hand experience as a landlord

MWT

gsw55 said:

I would suggest you should first speak with your lender as they may allow you to let the property.

Consent to let isn't going to solve the problem of needing to clear the £60k interest only mortgage by November this year...

Mustbeananswer?? said:

There is a good demand for rental properies around here...as only a few can buy.I am 64 and have a few healh issues so would probably qualify for a cheap council flat...which would be fine for me.Id settle for covering the cost of the mortgage (any ideas 60k borrowing ...interest only.....repaytments) and the cost of council renting £450 monthly 

I assume from what you've posted so far, the current interest only mortgage ends in November and needs to be repaid at that point?

Re the Council flat, as mentioned above, I doubt you would qualify while you retain ownership of a house... but was this your 'somewhere to go' or is there somewhere else you were planning to move to?

The problem is trying to get a BTL mortgage while you don't have somewhere you live yourself, lenders are often unhappy with that sort of arrangement, hence my suggestion to talk to a broker...

housebuyer143

Just thinking of this from a lenders point of view, you can't afford to pay the loan off on the house you live in, you therefore want to move into rental and rent out said property after falling to sell it. 
Honestly, that would ring alarm bells and the lender will probably think you plan to live in it as you would then no longer be an owner occupier. 

I would probably sell it tbh, auction or if you need to and have a clean break, being a landlord through necessity isn't any fun.
Any income you make will need to be declared along with your equity in the property which may scupper your plans of getting help from the council.