Doer-upper - starting with residential moving to BTL mortgage?

[Gareth Young]

Hi,

I'm thinking about buying a property that needs moderate work (new bathroom and kitchen + painting etc) and then moving in to it for a few months. I'm eager to avoid a lengthy void after purchasing the property and since I only rent at the moment (although I have an investment property), I'm quite flexible and could save money by living there until it's ready.

My question is, what could I do from a mortgage point of view? Would I need to get a residential mortgage initially and then switch to BTL once I have finished the works? I assume that I would living in the flat for approx 6 months. Could I start off with BTL and save fees associated with remortgaging? Could I still consider it a 'void' from a tax point of view even though I was living there?

Basically, I have lots of general questions but imagine that this is a common approach, so any general advice would be very helpful indeed.

Many thanks,

Gareth

[Jason McClean]

Hi Gareth

 

It's common for mortgage lenders and insurers to ask about the tenants for the property and in all honesty if you are going to live in it then it doesn't stack up.

 

I think you need a residential mortgage and insurance in the first instance. Then transfer across when you get it let out. 

 

In my view it is not worth rubbing the mortgage and insurance providers the wrong way, get a decision against you and you will be paying for it for years by not being able to access products or paying higher costs.

 

And it follows if you are not renting the property out but living in it then I cannot see how you can treat it like a rental from a tax point of view. It is residential. 

 

Get it fixed up and renting ASAP...

 

Best

 

Jason

[Darren Simpson]

I'm in a similar situation, is there any issue with remortgage a residential mortgage after six months, and swapping it for a buy to let mortgage?

[Darren Simpson]

Thanks Richard, what would you say was a better way of moving on? I have a property which is about to finish it's renovation. It's on a resi mortgage and has about 200k equity in it now it's renovated. I want to let it and take equity out to buy & renovate a new property.

As above my plan was to take out a new resi mortgage for this, and purchase a property for around 400k. But if this isn't sustainable what would you recommend?

I had my first look at bridging finance this morning but if you're paying 1% a month on a loan of 300k over twelve months that's going to be pretty much all the profit gone?

I may be making some glaring errors but I'm eager to learn

Darren

[Darren Simpson]

Thank you Richard (belatedly) that's great advice