Regulated buy to let?

Ellalou

Does anyone have any experience with regulated buy to let mortgages? 

My parents have an interest only mortgage..have about £175k outstanding on a property that is worth approx £310k. This mortgage comes to an end in August 2025.

I am looking at options to allow them to stay in the property and retired. 

I was looking at a regulated buy to let as they would be immediate family residing in the property. 

 

Is this possible? Are they able to gift the equity? 

How would it work with me having another mortgage? Do I get charged more interest as it would be my second property? 

I am 41 years old, a salary of £59k and have a mortgage with my husband at the moment. 

I have a great pension and the option to retire at age 55 where I will receive a lump sum and pension. I would be using that lump sum to pay towards my current mortgage. 

I’m just trying to see if a regulated but to let is even an option for us or if I should be thinking of other ways to alllow them to keep living in their home! 

housebuyer143

I don't think it's really an option tbh. You don't appear to have enough salary to service both their mortgage and then yours on top, and are they planning to pay market value for the rent? 

Can they not look into something like retirement interest only mortgage or lifetime mortgage if they don't want to sell up? I'm not sure you purchasing the property is really the best thing as you will have to pay for 3% extra stamp duty on the full market value plus the normal stamp duty and then become a landlord.

Brie

I know nothing about BTL mortgages so will let others chat about that.

As far as I'm aware anyone could gift their property or a part of it to another - just need a solicitor to draw up the paperwork.  the question is though whether this is actually a good idea.  I believe it means that for you when you sell your portion of the property you will be subject to full CGT whereas your parents would not be as it is their primary residence.  there is also the issue of deprivation of assets if either of your parents need local authority assistance with care at some point.  not a problem while one or both of them are living in the home but as soon as both are out into a care home they will want the property sold and potentially will require you to sell your portion to fund their care as they gave you the equity. 

I'm wondering if it would be simpler (assuming it's possible) for you and your parents to get a mortgage together as I assume there is some financial reason that they may not be able to do this on their own.  If this a possibility it would avoid the situation of them there as tenants with all the legal extras that brings in to play.

Ellalou

Thanks, yeah I’m looking at both the RIO and lifetime mortgages too. 

The maximum they could borrow on the lifetime mortgage is £98k, it appears the older you are the more that figure goes up.

The RIO is proving not to be an option as they base affordability on 1 of them being able to pay the mortgage should one pass away and it’s not affordable due to the amount outstanding and the pension income they would review. 

A tricky one, they may be left with having to sell up. 

Keep_pedalling

Is your brother still living with them?

Ellalou

Keep_pedalling said:

Is your brother still living with them?

Yes he is, at the moment!