ChatterBank0 min ago
Changing To Buy To Let Mortgage
4 Answers
I have split with partner but we would like to keep our house on as a sort of business investment so we plan to rent it out. Our current mortgage is on a capital repayment at a fixed interest rate until June 2014. What charges are we likely to incur if we change to a buy to let mortgage before then?
On the other hand, if we rent it out anyway but just don't tell the mortgage company, how likely is it that I will be able to get another mortgage on my own if it appears that I already have one? I only earn £24,500 but I will have a deposit. Can anyone advise please? Thank you.
On the other hand, if we rent it out anyway but just don't tell the mortgage company, how likely is it that I will be able to get another mortgage on my own if it appears that I already have one? I only earn £24,500 but I will have a deposit. Can anyone advise please? Thank you.
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Hi - Technically you can't change your present mortgage to a buy to let -you have to repay your present mortgage and apply for a BTL. No money need change hands of course if your BTL mortgage is the same amount as your present one. The problem arises in that you will incur more costs to apply for a BTL and be expected to have at least 30% equity in the property. Also you will have to have a rental appraisal done as most BTL require the property to achieve 120% in rental per month against your mortgage repayments. You will also need an energy certificate and gas certificate before you can rent out and will have to take out landlord insurance. If you just rent out the property without changing the mortgage you may find your insurance policy is invalid and yes, you will have difficulty getting a personal mortgage for another property -HTH
When you have a Buy To Let mortgage the loan to value at the moment is a lot higher so if you remortgaged you may not have enough equity.
But a few years ago I was in a position where I was was on a repayment mortgage and had to let out the property instead of living in it. I contacted the mortgage company and they agreed that I could continue with the same mortgage. Also if you have a BTL property you are responsible for the buildings insurance and you have to take out Landlords Insurance.
BTL mortgages usually carry a higher rate of interest due to nature of them as they are classed as businesses
My advice would be speak to your mortgage company. You will also need to know how much you could potentially earn in rent. I have a property that I rent out at the moment and this is with a Property Management Company. They do all the work in collecting rent, repairs, finding and vetting new tenants all contracts etc. They charge a percentage of the rent for doing this. I feel it is worth it as I lived distance away and I do not want to be bothered by the tenant if say the tap drips and it needs repairing. Also the property management charge is also tax deducted as you have to pay tax on any profit you make from renting a property.
Hope this helps
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But a few years ago I was in a position where I was was on a repayment mortgage and had to let out the property instead of living in it. I contacted the mortgage company and they agreed that I could continue with the same mortgage. Also if you have a BTL property you are responsible for the buildings insurance and you have to take out Landlords Insurance.
BTL mortgages usually carry a higher rate of interest due to nature of them as they are classed as businesses
My advice would be speak to your mortgage company. You will also need to know how much you could potentially earn in rent. I have a property that I rent out at the moment and this is with a Property Management Company. They do all the work in collecting rent, repairs, finding and vetting new tenants all contracts etc. They charge a percentage of the rent for doing this. I feel it is worth it as I lived distance away and I do not want to be bothered by the tenant if say the tap drips and it needs repairing. Also the property management charge is also tax deducted as you have to pay tax on any profit you make from renting a property.
Hope this helps
A
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