Residential mortgage/buy to let issue
Discussion
I am almost ready to buy my first home with my wife as we have saved long and hard for our 25% deposit. My problem is I bought a house a few yrs ago which I have been letting out and this house was purchased using a normal residential mortgage with A&L. I now need a mortgage again for the purchase of my new house. My current deal on my investment property is with A&L and is for fixed for 3yrs so at the moment I break even each month which I’d like to maintain. If I have to pay out more for this property then this will affect how much I can pay monthly for the new property.
Am I going to have trouble getting a new mortgage? What options do I have?
Any advice appreciated...thanks in advance!
Am I going to have trouble getting a new mortgage? What options do I have?
Any advice appreciated...thanks in advance!
musclecarmad said:
well you need to speak to a and l to tell them you are letting out the property for a start as what you are doing is against the law if it is still on a residential mortgage.
How is it against the law?Against the T&C's of the mortgage, yes. But not against the law.
musclecarmad said:
if you go for a new residential mortgage you are likely to have to lie on the application as they will ask questions about your existing residential mortgage.
No they won't. But they will ask about existing outgoings.musclecarmad said:
inform alliance and leicester and tell them you are letting the property and see what they say. they may be ok with it, they may terminate your deal, they may increase the interest and so on but you need to be honest. Have you been declaring the tax on your property via self assessment?
You should inform A&L. To cover yourself you realy really do have to1/ Inform A&L and get permission to let
2/ Inform the Taxman and complete an annual tax return
3/ Ensure you have insurance that knows the property is let. This ones kinda important because if they don't know the property is let then you ain't insured
Edited by Sir Bagalot on Tuesday 19th October 21:42
If you tell them, they'll probably want to increase your interest rate. Having worked on the other side, the issue only tends to arise if the mortgage isn't paid and they visit the property.
If you go to Coventry for your new deal, they'll want proof that it's on a BTL deal, otherwise most will ignore it and treat it as self-funding.
If you go to Coventry for your new deal, they'll want proof that it's on a BTL deal, otherwise most will ignore it and treat it as self-funding.
auditt said:
Cant you have two residential mortgages?
Why i say this is because if house 1 does not sell but you can afford to buy house 2 with a big enough deposit?
provided your salary can cover both mortages if not no. Why i say this is because if house 1 does not sell but you can afford to buy house 2 with a big enough deposit?
Permission to let is your only hope here. If you have to go down buy to let route you may have to pay in more deposit as the ltv currently may be too high ie currently max is 75% ltv from what I've seen so if it's higher then your going to have to pay in plus the buy to let fee which will be x% of the loan amount easily £5k is possible.
mcflurry said:
auditt said:
Cant you have two residential mortgages?
Why i say this is because if house 1 does not sell but you can afford to buy house 2 with a big enough deposit?
I did that, as bridging loans seem to be at subprime rates these days..Why i say this is because if house 1 does not sell but you can afford to buy house 2 with a big enough deposit?
Zero deposit on both, but had enough equity.
Ok, I have a plan. I will contact A&L when the time comes and let them know I plan to let the existing property out. Hopefully, they will give me permission to let without penalising me or charging me a higher rate. I have over 25% capital in this property.
Then for my new property I can find a first time buyer deal and hopefully, not be affected by my rental property in terms of deals available to me.
Then for my new property I can find a first time buyer deal and hopefully, not be affected by my rental property in terms of deals available to me.
s4suk said:
Ok, I have a plan. I will contact A&L when the time comes and let them know I plan to let the existing property out. Hopefully, they will give me permission to let without penalising me or charging me a higher rate. I have over 25% capital in this property.
Then for my new property I can find a first time buyer deal and hopefully, not be affected by my rental property in terms of deals available to me.
You won't be getting a first time buyer deal - as you're not a first time buyer. And just because you have permission to let, doesn't automatically entitle you to a new deal. As previously said, there are lenders who will ignore your existing mortgage if it's let, whether or not you have permission. Then again, there are some that will not.. Then for my new property I can find a first time buyer deal and hopefully, not be affected by my rental property in terms of deals available to me.
There is a worrying issue here which has been highlighted. Risk to you is notably above low take heed of the advice.
Your let to gamble property could have it's debt called in - what would you do? This is your causing due to breaking the t&cs of the loan. Reason why I would inagine it is to reduce cost to yourself however you have gone about it in the totally wrong and naive/fradulent way.
Next you claim you have 25% equity in the property- um that's your view if the sole mortgage supplier states it's worth less you'd have to fill that gap with a cash injection.
If you do have to make a cash injection from your op it would appear that then there wouldn't be adequate deposit for the mortgage deal/rate your after which needs a certain level of ltv.
Add that lot together and that's a whole world of s
t. Then of course IF you haven't been completing self assessment forms then you have been underpaying tax- now even if you didn't know you had to that's still your fault and could result in a fine plus of course the backdated outstanding tax.
Lots to do. I would start with the permission to let that's paramount and then register for self assessment and get the tennants on the electoral role and also get that landlord INS.
Be honest with the tax man put your hands up and given you have come forward to be legal you may escape a fine just a slap on the wrist.
I enjoy having sex I don't want to become a porn star
Your let to gamble property could have it's debt called in - what would you do? This is your causing due to breaking the t&cs of the loan. Reason why I would inagine it is to reduce cost to yourself however you have gone about it in the totally wrong and naive/fradulent way.
Next you claim you have 25% equity in the property- um that's your view if the sole mortgage supplier states it's worth less you'd have to fill that gap with a cash injection.
If you do have to make a cash injection from your op it would appear that then there wouldn't be adequate deposit for the mortgage deal/rate your after which needs a certain level of ltv.
Add that lot together and that's a whole world of s
t. Then of course IF you haven't been completing self assessment forms then you have been underpaying tax- now even if you didn't know you had to that's still your fault and could result in a fine plus of course the backdated outstanding tax. Lots to do. I would start with the permission to let that's paramount and then register for self assessment and get the tennants on the electoral role and also get that landlord INS.
Be honest with the tax man put your hands up and given you have come forward to be legal you may escape a fine just a slap on the wrist.
I enjoy having sex I don't want to become a porn star
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