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Changing from a residential to buy to let


RJN7891

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Hi All,

 

I have scenario where buy I own a property with a friend. We are now at the stage where we would like to purchase our own homes with our respective partners but would like to retain the property as a long term investment. I assume this will mean transferring over to a buy to let mortgage. I'd be grateful for any advice/help with this. We have circa 75% LTV on the property. If any one can help (Broker or otherwise) I'd be very grateful! 


Thanks, 


Rob

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So by the sounds of things this property was residential, and still is your main residence for both of you?

 

If that's the case then moving to a BTL would now fall under the "Consumer BTL" criteria. By and large the lenders expect the same as they would for a standard BTL, but they need to also prove affordability, and ensure the property in question is not going to remain residential. The former is dealt with in different ways, but generally the new BTL lender will be looking at your onward plans and will be keen to ensure that the income you have is sufficient to manage the BTL and the cost of living in the new residential. Lenders do this in a variety of ways, often opaquely. They are not expecting you to demonstrate you can afford everything, but they are looking for a comfortable margin. The second might be the toughest for you both, because most BTL lenders require that the new property completes on the same day as the BTL, specially if you are using mortgage funds for the onward purchase. If you are both buying, you may both need to complete at the same time. If you need to pull some money out of that BTL for your onward purchase things are going to be very difficult to coordinate. 

 

If you don't need (or cant really) pull money out of the BTL that's great. The best bet is to leave the BTL remortgage until later on. Get consent to let from the currently lender, buy the new place and move out. put a tenant in and get an AST signed. Now when you go to a lender, they simply need to be comfortable that you will not live there, which is much easier to demonstrate when you have a tenant in, can show an AST and you are both already on the voters roll at a new address (this can take up to 3 months though).It will still be a Consumer BTL because you have lived there, but its a much easier proposition. Plus residential rates are probably lower, you might as well see out those rates whilst your present lender gives you consent (which is typically time limited) and switch to a BTL when necessary. As long as the present lender is OK with the situation that's fine.

043_logo_final_03.png.0cdf828351f81e6097208048ac2d018d.pngStuart Phillips

Independent, Whole of Market Mortgage Broker

AALTO Mortgages Ltd

Web  www.aaltomortgages.com

Email  sales@aaltomortgages.com

Call  020 7183 1101

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