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Mortgages/Finance question.

edd666999

Well-known Member
What's your opinion on what I should do?

I currently own a house I purchased with my brother 7 years ago. LTV of 60%
He lives else where.

While living here I have saved up a 25% deposit to buy a new home for me n the mrs.

The plan is to move my current houses mortgage onto a buy to let and Rent the house out.

And purchase another house.

In what order would you do this?

If I today swapped my mortgage to a buy to let but in a weeks time I find my dream home, will I be able to apply for another mortgage so quickly?

If I waited till the house I want comes up, buy it then swap my mortgage to a buy to let, how long would I have to wait?

My main concern is around my credit score and how re mortgaging affects it, If I have to wait for it to recover or if a lender isn't interested in when my last credit was acquired but more if I can afford new credit.

Any qualified finance based guys out there? :)

Cheers!

A few points:

My current home+mortgage need to be a buy to let by at least Jan 2016.

I'm not currently in a product on my current mortgage.

I'm not wondering if its ok to live in a home that's mine and under a buy to let mortgage.

I already know I can borrow the extra cash without the bank seeing an rental income from my first property.
 

Noggin1980

Well-known Member
if you have a decent credit score you arn't going to have to worry about doing 1 then the other in either order, remortgaging isn't going to do any significant harm to your credit score.

Are you sure they will think you can afford getting a mortgage while you already have the current one? what you think you can afford and what the bank thinks can be wildly different, especially since they will take into account what happens if the bank of England rate goes up to something like 5%.

due to a gift from my father in law which we invested we are the most comfortable financially we have ever been but have just gone to remortgage the house and struggled (sorted now I think, passed underwriter today) because they ignored our investment income, ignored most my benefit and treated our rental income as secondary income and this is just a £132k mortgage.
 

edd666999

Well-known Member
24 months ago I was in the same position and went through the credit checks from the bank and they would lend me enough then, in that 2 years I saved another 15% and paid off 2 cars and no longer have debt other than my mortgage, So my position has gotten better.
 

Noggin1980

Well-known Member
I'd do it in the order that is most convenient then, you can sign up to a free trial of experian to see your credit report and see (at least a good approximation) of what they will see. Do it through topcashback or quidco and you'll actually make about £8 checking your report (remember to cancel at the right time).

Asking on the MSE forums in their mortgage forum is a good idea, they have lots of brokers etc who post there and can give you a proper answer, rather than from just some bloke.
 

edd666999

Well-known Member
I get my credit report each month for free anyway so Im aware of my score, Its always 5* 999/1000 :laugh: That last damn point!
 

blue max

Distinguished Member
Ironically it can be just as bad not to have had credit. Every time you need it, they all seem reluctant! Unless you have a history of paying loads of interest off when required.
 

Iain42

Well-known Member
When I let my house, I had a six month period where I was letting it, but didn't have to change the mortgage, so you may find you have some slack there. I just made a simple telephone call to my mortgage provider to let them know.

Given that, I was speaking to our IFA last week, and there are some excellent deals available on mortgages just now, so you may be able to lock down on a long term fix buy to let, should you wish. Apologies if I'm telling you what you know already, but the interest payments on your buy to let mortgage can be offset against any rental income, so worth doing the arithmetic on what mortgage is best to pay down, once you have them both.

Do you have an IFA you use, or know someone who can recommend one? You may get some good, professional guidance.
 

PSM1

Distinguished Member
24 months ago I was in the same position and went through the credit checks from the bank and they would lend me enough then, in that 2 years I saved another 15% and paid off 2 cars and no longer have debt other than my mortgage, So my position has gotten better.
The problem is the rules have changed significantly in the last 2 years. I bought a new house 2 yrs ago and the mortgage application etc. was easy. My brother just did the same just before Christmas and the hoops he had to jump through were a lot worse. He almost did not get it due to the way they now calculate affordability. So do not assume that because they would have offered you the money 2 years ago and you are in a better position now that they will still lend it. I think you need to go back and see what you can borrow now before proceeding any further as it may be a lot different.
 

SteveCritten

Distinguished Member
You can't do it in any order as you are not allowed more than one residential mortgage at a time. Your best bet is to arrange a buy to let mortgage now ready for when you do find your dream home. Any mortgage offer is valid for 3 months. Check with an advisor though to be sure.
 

imightbewrong

Distinguished Member
You can't do it in any order as you are not allowed more than one residential mortgage at a time.
Is that an actual rule? Isn't it based on affordability? Presumably a couple would be allowed two houses but is it not possible to buy a second house to do up for example?
 

Woodywizz

Distinguished Member
Is that an actual rule? Isn't it based on affordability? Presumably a couple would be allowed two houses but is it not possible to buy a second house to do up for example?
It's not a rule. And yes it is based on affordability. I'm a Private Bank Manager and have plenty of clients with 2, 3, 4+ residential mortgages.

To the op, you have no need to change product to a Buy To Let or you need to do is contact your mortgage provider and ask them for a consent to let. You pay a small fee and stay on your residential mortgage product, which will be better than any buy to let rate at the same loan to value.
 

SteveCritten

Distinguished Member
Having checked on this it seems you are partly right @Woodywizz. You may apply to your lender to allow you to let your current home but they may insist you convert it to a buy to let mortgage. Some lenders apparently only lend on one property as a "main residence" on the cheaper residential rate. I have 4 'mortgages' myself but only one main residence mortgage.
The other thing to remember is if you do not inform your lender and your insurance company that you are renting the property your insurance may be invalid. Sorry if the way I put it was confusing.
 

Woodywizz

Distinguished Member
You can only request a consent to let if it is your main residence already with an existing residential mortgage product. Any other properties which you own and let out would have to be on a Buy To Let product. The clients whom I know with more than one residential mortgage are clients who have several homes, for their own use, throughout the country. Or clients who have moved out of their main home, done a consent to let, and moved into another property. Having several residential mortgages is allowed, dependent upon affordability and if it is for your own use or family's use, but tbf is not common amongst 'Joe Public'.
 

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