Two residential mortgages whilst trying to change one to buy to let

UKresident3333

My partner and I bought a flat together with a residential mortgage and lived there for two years. We then bought a new place on a second residential mortgage and have moved there. The plan was to change our old place to a buy to let mortgage but after a lengthy process the BTL mortgage was rejected with no reason given. We are now left with two residential mortgages. We can afford to pay for both so that isn't the issue. But will it be an issue for the lender (for our previous residence) that we now have a second residential mortgage and have moved somewhere else? Are we doing anything wrong here? We are still going to apply for new BTL mortgages for our old place but who knows how long it will take to go through the process again. 

kingstreet

You should ask the lender for the let property for consent to let.

UKresident3333

kingstreet said:

You should ask the lender for the let property for consent to let.

We did but they didn't give permission as we had no intention of returning to the property. Their rule is you can only gain consent to let if you plan on returning but we've now got our new property which is where we live

eddddy

UKresident3333 said:

Are we doing anything wrong here? 

You might be... it depends on the terms of your mortgages.

Does the mortgage on the 'first flat' have a condition that the flat must be your primary residence?

And when you arranged the new mortgage, when the lender assessed your affordability, did you say you'd be keeping your first mortgage?  Was there a condition in your new mortgage offer that you must redeem the first mortgage? (TBH, if there was a condition like that, your solicitor should have spotted it.)


But realistically, as long as you keep paying both mortgages, it's unlikely that the lenders will find out and/or be too bothered.

housebuyer143

They must have given some reason for decline? It's very unusual that they just reject it no reason given. 
Was it the rent amount or the property? I would try another lender but it would help to know what aspect was the problem.

MultiFuelBurner

Did you just apply yourself rather than using a mortgage broker?

UKresident3333

MultiFuelBurner said:

Did you just apply yourself rather than using a mortgage broker?

Used a mortgage broker

UKresident3333

eddddy said:

UKresident3333 said:

Are we doing anything wrong here? 

You might be... it depends on the terms of your mortgages.

Does the mortgage on the 'first flat' have a condition that the flat must be your primary residence?

And when you arranged the new mortgage, when the lender assessed your affordability, did you say you'd be keeping your first mortgage?  Was there a condition in your new mortgage offer that you must redeem the first mortgage? (TBH, if there was a condition like that, your solicitor should have spotted it.)


But realistically, as long as you keep paying both mortgages, it's unlikely that the lenders will find out and/or be too bothered.

We thought there would be a condition like this but at closer inspection we couldn't find anything on our mortgage offer stating that it is subject to the previous mortgage being converted to a BTL. So there can't be any issue for the new lender? I'm not sure if the first flat had a condition that it must be primary residence. If so, are we doing anything wrong if we are continuing to try to change it to BTL? We're not just keeping it as a second residence

eddddy

UKresident3333 said:

We thought there would be a condition like this but at closer inspection we couldn't find anything on our mortgage offer stating that it is subject to the previous mortgage being converted to a BTL. So there can't be any issue for the new lender? 

I guess it also depends on what you said on the application forms. If you said you would be redeeming your first mortgage, but you haven't - then you've breached the contract.

UKresident3333 said: I'm not sure if the first flat had a condition that it must be primary residence. If so, are we doing anything wrong if we are continuing to try to change it to BTL? We're not just keeping it as a second residence

Well...!!!

• If a contract says "you must do something"...  

• it's not the same as saying "you must try to do something".

So, again, you'd be breaching the contract.



Like if you're buying a house, the contract will essentially say...

• "You must pay for the house before completion occurs and you get the keys"

• Which doesn't mean... "You must try to pay for the house before completion and you get the keys"

But like I say, it's unlikely that the mortgage lenders will find out anyway. So it probably won't be an issue.

UKresident3333

eddddy said:

UKresident3333 said:

We thought there would be a condition like this but at closer inspection we couldn't find anything on our mortgage offer stating that it is subject to the previous mortgage being converted to a BTL. So there can't be any issue for the new lender? 

I guess it also depends on what you said on the application forms. If you said you would be redeeming your first mortgage, but you haven't - then you've breached the contract.

UKresident3333 said: I'm not sure if the first flat had a condition that it must be primary residence. If so, are we doing anything wrong if we are continuing to try to change it to BTL? We're not just keeping it as a second residence

Well...!!!

• If a contract says "you must do something"...  

• it's not the same as saying "you must try to do something".

So, again, you'd be breaching the contract.



Like if you're buying a house, the contract will essentially say...

• "You must pay for the house before completion occurs and you get the keys"

• Which doesn't mean... "You must try to pay for the house before completion and you get the keys"

But like I say, it's unlikely that the mortgage lenders will find out anyway. So it probably won't be an issue.

Would the new BTL lender we'll be applying through care at all that we clearly have two residential mortgages and what the conditions of those may be?

eddddy

UKresident3333 said:

Would the new BTL lender we'll be applying through care at all that we clearly have two residential mortgages and what the conditions of those may be?

They'll probably want to see your bank statements, so they'll see you're paying 2 mortgages. And they'll probably ask you if one will be paid-off when you get the BTL mortgage.



TBH, I think they could probably guess that there's a good probability that you've 'broken the rules' - but maybe they would purposely turn a blind eye, and not ask you too many questions.

On the other hand, I guess they might suspect that you fibbed on the application form for your current mortgage (by saying you would redeem your first mortgage) - which is technically mortgage fraud.

So I guess they might refuse to lend to you on principle, and/or because they'd be worried that if you've fibbed on mortgage application forms in the past, you might do it again.