Remortgaging BTL/Consent to Let

seradane

Our 5-year fixed rate mortgage for our home expires in April 2024. Around the same time, we are looking to head off on some long-term travelling and rent the house out while we are gone.

I am having a bit of trouble working out what our options are in terms of living in/letting out the house - how would we best structure this in terms of the appropriate mortgage? This is what I've learned so far, please correct me if I'm wrong!

a) I understand consent to let will only be granted during the fixed term, and would expire upon needing to remortgage, so there would be little point converting to this prior to 04/24 as it would immediately lapse and we'd be back to square one.

b) Once you remortgage, you would need to have this mortgage for 6-12 months first before you could apply for consent to let, so that would mean we'd have to delay leaving until 10/24 or later. Does this time limit still apply if you remortgage with the same provider?

c) If we remortgaged straight into a BTL mortgage, we are not permitted to live in it ourselves either before we leave (if we don't go before 04/24) or when we return?

What other options are there? Thanks for your advice!

kingstreet

A rate switch/product transfer with your existing lender and a request for consent to let after that?

alanyau88

Remortgage to a BTL mortgage to complete in April 2024.  Your 5 year fix doesn't expire until April 2024 and ERC would make it silly to remortgage before that date anyway.  You just get a BTL mortgage offer and instruct your solicitor to only complete in April 2024 when your 5 year fix expires or whenever you decide for your long term travelling.

seradane

kingstreet said:

A rate switch/product transfer with your existing lender and a request for consent to let after that?

So just transferring to a new fixed period with the same lender will let you skip the whole 6-month 'waiting period' that you usually need? 

If I called up my existing mortgage provider would they be able to discuss these options with me? I know sometimes they're a bit like shrug, it depends, until you are actually applying, but it'd be good to get as clear a plan in place ahead of time as possible!

seradane

alanyau88 said:

Remortgage to a BTL mortgage to complete in April 2024.  Your 5 year fix doesn't expire until April 2024 and ERC would make it silly to remortgage before that date anyway.  You just get a BTL mortgage offer and instruct your solicitor to only complete in April 2024 when your 5 year fix expires or whenever you decide for your long term travelling.

How would this work if we weren't able to leave until, say, May - presumably you're not able to live in the property if it is under a BTL mortgage, so I guess we'd have to temporarily go on the SVR until we left? And then how does it work when you get back, is it simple to switch back to a residential mortgage or do you have ERCs as well with BTLs?

alanyau88

seradane said:

alanyau88 said:

Remortgage to a BTL mortgage to complete in April 2024.  Your 5 year fix doesn't expire until April 2024 and ERC would make it silly to remortgage before that date anyway.  You just get a BTL mortgage offer and instruct your solicitor to only complete in April 2024 when your 5 year fix expires or whenever you decide for your long term travelling.

How would this work if we weren't able to leave until, say, May - presumably you're not able to live in the property if it is under a BTL mortgage, so I guess we'd have to temporarily go on the SVR until we left? And then how does it work when you get back, is it simple to switch back to a residential mortgage or do you have ERCs as well with BTLs?

Just to be clear, a consent to let is not a given and your lender may refuse. Letting out your property is not as simple as here's the keys, help yourself.  You need to comply with landlord obligations such as gas safety and electrical safety certificates.  It is not as simple as your tenancy agreement expired and you must leave.  When your tenants move in, they have rights as a tenant depending on what type of tenancy agreement you sign with them. It is not as simple as your tenancy agreement expired and you must leave. IF they refuse to leave, you need to get an eviction order.  To get an eviction order, everything must comply with your duties as a landlord, else the court may not evict.  

A BTL mortgage is usually for a fixed period although you can get trackers that have no Early Repayment Charges and yes, if you don't complete your re-mortgage after the 5 year fix ends, then it goes onto the SVR.

seradane

alanyau88 said:

seradane said:

alanyau88 said:

Remortgage to a BTL mortgage to complete in April 2024.  Your 5 year fix doesn't expire until April 2024 and ERC would make it silly to remortgage before that date anyway.  You just get a BTL mortgage offer and instruct your solicitor to only complete in April 2024 when your 5 year fix expires or whenever you decide for your long term travelling.

How would this work if we weren't able to leave until, say, May - presumably you're not able to live in the property if it is under a BTL mortgage, so I guess we'd have to temporarily go on the SVR until we left? And then how does it work when you get back, is it simple to switch back to a residential mortgage or do you have ERCs as well with BTLs?

Just to be clear, a consent to let is not a given and your lender may refuse. Letting out your property is not as simple as here's the keys, help yourself.  You need to comply with landlord obligations such as gas safety and electrical safety certificates.  It is not as simple as your tenancy agreement expired and you must leave.  When your tenants move in, they have rights as a tenant depending on what type of tenancy agreement you sign with them. It is not as simple as your tenancy agreement expired and you must leave. IF they refuse to leave, you need to get an eviction order.  To get an eviction order, everything must comply with your duties as a landlord, else the court may not evict.  

A BTL mortgage is usually for a fixed period although you can get trackers that have no Early Repayment Charges and yes, if you don't complete your re-mortgage after the 5 year fix ends, then it goes onto the SVR.

Yes I'm aware of the obligations/risk of being a landlord, that's not the question I'm asking.

But in some ways the inflexibility of the BTL mortgage in terms of not being able to live in it ourselves has me hesitant to go down that path - as you have said it's not like you can say with any certainly that your tenants will only stay for a set period of time - so you could end up with a situation where you're either having to pay ERCs to come off the BTL, or absorbing the SVR for an unknown length of time if your tenants dont stay for exactly the length of time of the fixed period...

silvercar

seradane said:

alanyau88 said:

seradane said:

alanyau88 said:

Remortgage to a BTL mortgage to complete in April 2024.  Your 5 year fix doesn't expire until April 2024 and ERC would make it silly to remortgage before that date anyway.  You just get a BTL mortgage offer and instruct your solicitor to only complete in April 2024 when your 5 year fix expires or whenever you decide for your long term travelling.

How would this work if we weren't able to leave until, say, May - presumably you're not able to live in the property if it is under a BTL mortgage, so I guess we'd have to temporarily go on the SVR until we left? And then how does it work when you get back, is it simple to switch back to a residential mortgage or do you have ERCs as well with BTLs?

Just to be clear, a consent to let is not a given and your lender may refuse. Letting out your property is not as simple as here's the keys, help yourself.  You need to comply with landlord obligations such as gas safety and electrical safety certificates.  It is not as simple as your tenancy agreement expired and you must leave.  When your tenants move in, they have rights as a tenant depending on what type of tenancy agreement you sign with them. It is not as simple as your tenancy agreement expired and you must leave. IF they refuse to leave, you need to get an eviction order.  To get an eviction order, everything must comply with your duties as a landlord, else the court may not evict.  

A BTL mortgage is usually for a fixed period although you can get trackers that have no Early Repayment Charges and yes, if you don't complete your re-mortgage after the 5 year fix ends, then it goes onto the SVR.

Yes I'm aware of the obligations/risk of being a landlord, that's not the question I'm asking.

But in some ways the inflexibility of the BTL mortgage in terms of not being able to live in it ourselves has me hesitant to go down that path - as you have said it's not like you can say with any certainly that your tenants will only stay for a set period of time - so you could end up with a situation where you're either having to pay ERCs to come off the BTL, or absorbing the SVR for an unknown length of time if your tenants dont stay for exactly the length of time of the fixed period...

I wouldn't give yourself a headache over a few weeks difference. If you have done a product transfer to a BTL and you are actively marketing the property or have a tenant signed to move in a couple of weeks later, no one is going to say or do anything if the actual tenancy date and the start of the BTL aren't exactly the same.

Same when the tenancy finishes, if your tenants don't move out you would take legal action. If your lender objected that a period of consent to let had ended, then you just say you are taking legal action to regain the property. They should be aware as you of UK tenancy law when they agreed consent to let.

Not sure how easy it is to transfer a BTL to a residential (occupying) mortgage, it may depend on whether the lender offers them. There is no such thing as consent to occupy on a BTL. If you informed the lender you were now living in a property with a BTL mortgage, they may ask you to remortgage elsewhere.