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Buy to let mortgage with family member as my tenant.
gwarde
Posts: 23 Forumite
Hi
My daughter is shortly starting he second year at Uni and due to a shortage of halls has to find her own accommodation, she doesn't to go in a house share (she didn't particularly enjoy the communal living in halls) so is looking for a studio to rent. It came to my mind that a better way would be to buy a studio/flat on a buy to let mortgage and rent it to her using her student finance which would just about cover the mortgage. I have only just scratched the surface but it seems that every corner I turn there is a pitfall waiting for me, particularly with the limited number of mortgage lenders who offer these mortgages. I believe it is to do with unregulated and regulated mortgages, my LTV would be approx 73% so we have a reasonable deposit. Any help or suggestions as to where to go would be appreciated.
Thanks
My daughter is shortly starting he second year at Uni and due to a shortage of halls has to find her own accommodation, she doesn't to go in a house share (she didn't particularly enjoy the communal living in halls) so is looking for a studio to rent. It came to my mind that a better way would be to buy a studio/flat on a buy to let mortgage and rent it to her using her student finance which would just about cover the mortgage. I have only just scratched the surface but it seems that every corner I turn there is a pitfall waiting for me, particularly with the limited number of mortgage lenders who offer these mortgages. I believe it is to do with unregulated and regulated mortgages, my LTV would be approx 73% so we have a reasonable deposit. Any help or suggestions as to where to go would be appreciated.
Thanks
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Comments
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You are right about the complication being regulation. Regulation makes it difficult for buy to let lenders to offer lending with a family tenant, as the family tenancy makes the case regulated ( buy to let mortgages are not regulated )
There is a specialist product available for just this eventuality.
Consult a good mortgage broker.I am a Mortgage Broker
You should note that this site doesn't check my status as a Mortgage Broker, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice.0 -
Thanks for the quick reply, I'll research brokers and report back if a solution comes up. Sometimes the simplest ideas are the most complicated!!0
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May be easier to borrow further on your main home to fund the studio.
Would your daughter be prepared to share with 1 other? Buying a 2 bed place and having the income from the other sharer to help pay the mortgage may make the finances easier.I'm a Forum Ambassador on the housing, mortgages & student money saving boards. I volunteer to help get your forum questions answered and keep the forum running smoothly. Forum Ambassadors are not moderators and don't read every post. If you spot an illegal or inappropriate post then please report it to forumteam@moneysavingexpert.com (it's not part of my role to deal with this). Any views are mine and not the official line of MoneySavingExpert.com.0 -
Yes, that is my next step to take out the equity in my residential home, just not sure how that will work with a technical 'buy to let' property. I don't think sharing is in the equation, but it may be necessary.0
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