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  • FIRST POST
    • mastertona09
    • By mastertona09 4th Jan 18, 10:39 AM
    • 4Posts
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    mastertona09
    Mortgage Question - Residential to BTL?
    • #1
    • 4th Jan 18, 10:39 AM
    Mortgage Question - Residential to BTL? 4th Jan 18 at 10:39 AM
    Hi

    I will be looking to buy my first house (in the UK) in the next year or two but am not very knowledgeable in this space.

    My question is:

    What happens if I take out a residential mortgage but after (for example) 3 years, my circumstances change and I need to move abroad, are there methods/processes in existence to then allow me to rent out this property whilst I am living abroad?

    Thanks!
Page 1
    • Caz3121
    • By Caz3121 4th Jan 18, 10:45 AM
    • 11,279 Posts
    • 7,397 Thanks
    Caz3121
    • #2
    • 4th Jan 18, 10:45 AM
    • #2
    • 4th Jan 18, 10:45 AM
    the lender may give "consent to let" for a limited period (possibly for a fee/higher rate) or they may not, at which point you would be looking for a BTL mortgage from the same or different lender
    • mastertona09
    • By mastertona09 4th Jan 18, 10:54 AM
    • 4 Posts
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    mastertona09
    • #3
    • 4th Jan 18, 10:54 AM
    • #3
    • 4th Jan 18, 10:54 AM
    Hi Caz3121

    Thanks for your response!

    If they do not provide consent to let - do you have any idea of the cost expectation for exiting the residential mortgage and picking up a BTL?
    • Cornucopia
    • By Cornucopia 4th Jan 18, 10:59 AM
    • 10,115 Posts
    • 10,047 Thanks
    Cornucopia
    • #4
    • 4th Jan 18, 10:59 AM
    • #4
    • 4th Jan 18, 10:59 AM
    Depends on whether there are redemption penalties on the residential mortgage and whether there are product fees for the BTL mortgage.

    Other than that, if you move from one lender to another you may need to pay for a valuation and legal fees (although some lenders offer these as an incentive on some mortgages). You may need to move lenders if you find that your residential lender doesn't offer BTLs, or the rates/criteria aren't competitive.

    Also, deposits tend to be higher on BTL than Residential.
    Last edited by Cornucopia; 04-01-2018 at 11:04 AM.
    I'm a Board Guide on the Phones & TV, Techie Stuff, In My Home,
    The Money Savers Arms and Food Shopping boards. I'm a volunteer to help the boards run smoothly, and I can move and merge threads there. Any views (especially those on the UK TV Licence) are mine and not the official line of moneysavingexpert.com.

    Board guides are not moderators. If you spot an inappropriate or illegal post then please report it to forumteam@moneysavingexpert.com
    • YHM
    • By YHM 4th Jan 18, 11:19 AM
    • 537 Posts
    • 198 Thanks
    YHM
    • #5
    • 4th Jan 18, 11:19 AM
    • #5
    • 4th Jan 18, 11:19 AM
    As above, generally you will need to hold 25% equity to convert to a formal BTL. There are fee free BTL products to keep costs down if you need to transfer, but cannot forecast what they will look like in 3 years time.
    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
    • mastertona09
    • By mastertona09 4th Jan 18, 12:33 PM
    • 4 Posts
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    mastertona09
    • #6
    • 4th Jan 18, 12:33 PM
    • #6
    • 4th Jan 18, 12:33 PM
    Thanks all - really helpful.

    Given the above, would you be able to provide me some advice for the following scenario:

    Currently feel like I am p*ssing away cash renting when it could be going towards the ownership of an asset (a property).

    I am based in London currently but probably looking to purchase on London outskirts.

    Realistically, it is likely I will only be based in the UK for c. 3 years before moving abroad for an unknown period of time.
    • YHM
    • By YHM 4th Jan 18, 12:43 PM
    • 537 Posts
    • 198 Thanks
    YHM
    • #7
    • 4th Jan 18, 12:43 PM
    • #7
    • 4th Jan 18, 12:43 PM
    Can give you guidance, but not advice (for that you need a broker!).

    Just make sure you are putting a sufficient deposit down to ensure you will be able to convert the mortgage to a BTL in a few years time.
    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
    • Cornucopia
    • By Cornucopia 4th Jan 18, 3:51 PM
    • 10,115 Posts
    • 10,047 Thanks
    Cornucopia
    • #8
    • 4th Jan 18, 3:51 PM
    • #8
    • 4th Jan 18, 3:51 PM
    There's the possibility of making an educated guess of how much deposit to put down now, with a view to getting to 75% LTV within 3 years through house price inflation. In the SE, I would suggest something in the region of 15%.

    I'd also suggest looking at rental yields, which are traditionally quite low in Inner London, but more respectable elsewhere in the SE.
    I'm a Board Guide on the Phones & TV, Techie Stuff, In My Home,
    The Money Savers Arms and Food Shopping boards. I'm a volunteer to help the boards run smoothly, and I can move and merge threads there. Any views (especially those on the UK TV Licence) are mine and not the official line of moneysavingexpert.com.

    Board guides are not moderators. If you spot an inappropriate or illegal post then please report it to forumteam@moneysavingexpert.com
    • Thrugelmir
    • By Thrugelmir 4th Jan 18, 6:14 PM
    • 58,979 Posts
    • 52,310 Thanks
    Thrugelmir
    • #9
    • 4th Jan 18, 6:14 PM
    • #9
    • 4th Jan 18, 6:14 PM
    T
    Realistically, it is likely I will only be based in the UK for c. 3 years before moving abroad for an unknown period of time.
    Originally posted by mastertona09
    Is retaining the property viable? Why not simply sell up.
    Financial disasters happen when the last person who can remember what went wrong last time has left the building.
    • ValiantSon
    • By ValiantSon 4th Jan 18, 8:42 PM
    • 2,047 Posts
    • 1,897 Thanks
    ValiantSon
    Is retaining the property viable? Why not simply sell up.
    Originally posted by Thrugelmir
    Agreed. You may find it better to sell after three years and realise the capital. If you expect to be moving away from the UK after that point, and possibly for a long time, then you may well be better having that money to invest in a place to live in your new country. Furthermore, do you really want the cost and hassle of being a landlord? It isn't simply a matter of collecting the rent and watching your wealth grow, and given recent changes the individual holding one or two rental properties is a much less attractive proposition than it once was.
    • mastertona09
    • By mastertona09 5th Jan 18, 10:06 AM
    • 4 Posts
    • 0 Thanks
    mastertona09
    Is retaining the property viable? Why not simply sell up.
    Originally posted by Thrugelmir
    I was under the impression that if it is only after 3 years time, the total fees that would be incurred on both acquisition and exit would be significant (when spreading over a short holding period).

    I am ill-informed in this area so I'm not quite sure how the value I would receive on sale is derived? i.e. the component fees, impact of the size of repayments made within those 3 years etc.
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