BTL Re-mortgage Queries

stu2500

Good afternoon. My partner and I have a flat we rent out (the tenant has just signed a new 12 month lease and is a long term tenant) but it is currently on SVR through Bank of Ireland. It is on a residential SVR as we have consent to let, not a BTL deal. We' tried to call them to swap the deal and get a cheaper monthly payment but apparently they can't swap the deal for one reason or another.

We're therefore going to speak to some other lenders to try and get a better deal. I wondered how this would work and if anyone can offer some information on this, some factors below include:

- it is in my wife's name only as it was her residence prior to us buying our faimly home
- it is on long-term let (the tennant has been in 3 years and jsut signed a new 12 month lease)
- we have aproximately 9 years left on the mortgage on interest only but we overpay each month to pay the full capital and interest payment amount
- we have around £40k left on the mortgage and it is valued at £65k
- my partner earns around £32k but we have a fmaily home which is mortgaged in both our names (I earn £60k), rsidential property is valued at £145k with a mortgage outstanding of £97k
- no financial probloems, 1x loan and 1x car loan

My question would be, what form of affordability checks are done if the flat is rented out already and we change lender? Woudl it be likely I need to go on the BTL mortgage to ensure we have sufficient affordability? Any other pitfalls involved in transferring to another lender on a BTL mortgage product.

Thanks in advance. I fairly clued up financially but the BTL stuff is something I'm not overly familiar with. 

Hoenir

stu2500 said:

 It is on a residential SVR as we have consent to let, not a BTL deal. We' tried to call them to swap the deal and get a cheaper monthly payment but apparently they can't swap the deal for one reason or another.

Appears that the BOI is no longer willing to grant consent to let. Hence the zero options for a further residential mortgage. Have you enquired whether they'll grant a BTL mortgage and if so what the options are. 

ACG

Generally speaking the rent needs to stack up. 
The calculation lenders use will vary depending on any number of things but if the rent is around 140% of the mortgage repayment at say 6% on interest only, it will probably pass. If it significantly less than that it might not. 

eh £100,000 mortgage at 6% is £500 pm on an interest only basis. 140% of that is £700. 
So on a £100k mortgage, the rent would need to be £700. 

Hopefully that makes sense. 

Speak to a broker if your struggling. BTLs can be quite complex. 

stu2500

We have asked them and also raised a query through their complaints team and they said we have no options at all other than stick on SVR with consent to let. It's affordable and we aren't struggling with the payments, it's just frustrating if we can get a deal elsewhere. 

I've reached out to a broker we used a few years back. Hoping he can help.

The value of the property is about £60k, rent is £450 a month. Our current residential mortgage is well within our affordability checks, therefotre, hoping we would be ok. If not, we'll just have to keep it as is. At least the balance is coming down I suppose.

Thanks for your replies.

Hoenir

stu2500 said:

We have asked them and also raised a query through their complaints team and they said we have no options at all other than stick on SVR with consent to let. It's affordable and we aren't struggling with the payments, it's just frustrating if we can get a deal elsewhere. 

Consent to let is not a back door way of obtaining a BTL mortgage. It's granted as a temporary measure at the discretion of the lender. Whether a lender offers BTL mortgage products or not is a commercial decision. Very different market to residential. 

stu2500

Hoenir said:

stu2500 said:

We have asked them and also raised a query through their complaints team and they said we have no options at all other than stick on SVR with consent to let. It's affordable and we aren't struggling with the payments, it's just frustrating if we can get a deal elsewhere. 

Consent to let is not a back door way of obtaining a BTL mortgage. It's granted as a temporary measure at the discretion of the lender. Whether a lender offers BTL mortgage products or not is a commercial decision. Very different market to residential. 

I'm aware of that, hence the questions. We've had consent to let on the property for over 7 years, no isses from BOI and they grant/renew it every year. I would have expected them to allow us to transfer to a BTL product, considering the situation 

kingstreet

Normally residential and BTL lending are operated by different brands/subsidiaries within a lender so it's not normally possible to move from one to the other without a formal remortgage being required as the mortgage deed is different in each case.

PropertyGuru_Wannabe

Why don’t you just apply or reach out to a broker who knows buy to let?
A quick browse shows lots of lenders around the 4.44% mark for Btl fixed for 5 years which is far better than the 7.84 BOI SVR.  Why don’t you just go for one as you are losing money every day needlessly.

A lot of accidental landlords that don’t seem to understand that Btl is a business and you need to treat it as such. You have a lot of obligations and responsibilities and if not done correctly, you may never lawfully get your house back from your tenant so be warned!

stu2500

PropertyGuru_Wannabe said:

Why don’t you just apply or reach out to a broker who knows buy to let?
A quick browse shows lots of lenders around the 4.44% mark for Btl fixed for 5 years which is far better than the 7.84 BOI SVR.  Why don’t you just go for one as you are losing money every day needlessly.

A lot of accidental landlords that don’t seem to understand that Btl is a business and you need to treat it as such. You have a lot of obligations and responsibilities and if not done correctly, you may never lawfully get your house back from your tenant so be warned!

I am in the process of reaching out to a broker I've used in the past. I was merely asking some information on this forum, as I have done in the past.

We aren't 'accidental landlords' and know the obligations and responsibilities of a landlord, which we adhere to, therefore, there won't be a problem like you've highlighted.