Home-buying tips - Slightly different situation

[C70R]

So, while I think I've got this figured out, I'd appreciate a bit of input from those with significantly more financial nous than I.

At the moment, MrsC (we're not married - this might be important) and I live in a rented flat in Central London, while we're renovating another flat (solely owned by MrsC) in London. The rough plan of attack is to move out of our rented pad into her flat for a couple of months while we get our finances in order (i.e. not paying rent, plus mortgage, plus renovation!) to buy somewhere Centrally.
Then, once her fixed mortgage period is over next year, we'll remortgage her place (in her name as a BTL) and take some equity out to add to our pot of cash for a deposit on the new place.

While we could easily see an IFA, I wondered if the good people of PH could help out with a few musings:
- Based on income:value the new purchase will need to be made jointly. However, given that I will be a first-time buyer, are there any ways we can benefit from this financially?
- Given that MrsC will be remortgaging to a BTL, what are our limitations on the % of equity we can leave in (20% rings a bell), and who should we consider moving to for this BTL mortgage?
- We had considered using a first-time buyer ISA in my name as a bit of a no-brainer (I didn't know they existed until yesterday!). However, they look a bit limiting (£1,200 plus £200/mth). Are there better places to put my cash (I already have a 1-2-3 with Santander and a Classic Plus with TSB)?

Thanks all - any input gratefully received. Apologies if the questions are a bit vague or basic, but we're just in the process of information gathering at the moment.

Edited by C70R on Wednesday 17th August 11:46

[okgo]

If buying jointly will you not get stung with the extra stamp duty on the new place as it will be a 2nd home for your partner?

Easily another £30k if you're buying anything of note.

[Mandat]

Don't forget to factor in the additional 3% stamp duty that you will have to pay when buying the second property.

[C70R]

Excellent point, both. Something we had (sadly) factored in, as the new rules aren't hugely helpful to us (our expected outlay has doubled!).

[Jockman]

If you buy in your own name, there will be no enhanced stamp duty.

If you buy in joint names then you will pay enhanced stamp duty.

If you sell the BTL within 3 years you will claim this money back.

If you don't sell within 3 years, yer fooooked.

This is how I understand how it works

[Jockman]

Oh, and btw, Halifax has just increased some of its first time buyer mortgage rates after the reduction in BOE rate.

Go figure.

[Sarnie]

C70R said:

- Based on income:value the new purchase will need to be made jointly. However, given that I will be a first-time buyer, are there any ways we can benefit from this financially?
- Given that MrsC will be remortgaging to a BTL, what are our limitations on the % of equity we can leave in (20% rings a bell), and who should we consider moving to for this BTL mortgage?

Edited by C70R on Wednesday 17th August 11:46

- Not really. Being a FTB doesn't really make any material difference.
- You need a Let-To-Buy mortgage not a BTL. Also, recent rule changes have means that LTB mortgages are now Consumer BTL and not Business BTL's........and not a huge amount of lender accept Consumer BTL mortgages, which is where you have previously lived in the property.

[Sarnie]

Jockman said:

Oh, and btw, Halifax has just increased some of its first time buyer mortgage rates after the reduction in BOE rate.

Go figure.

Been saying this for weeks.............a reduction in the base rate does NOT automatically mean a reduction in mortgage pay rates.......some lenders, as you've mentioned, have put rates up...............

[C70R]

Thank you very much, both. Excellent advice - and we were aware of the potential to recoup the stamp duty, so hopefully we'll be a position to take advantage of that.

Sarnie said:

- You need a Let-To-Buy mortgage not a BTL. Also, recent rule changes have means that LTB mortgages are now Consumer BTL and not Business BTL's........and not a huge amount of lender accept Consumer BTL mortgages, which is where you have previously lived in the property.

You've lost me completely. I'll accept that I'm new to letting, but I had no idea that an LTB mortgage was a thing. I'm off to do some research - any pertinent points to consider?

[Sarnie]

C70R said:

You've lost me completely. I'll accept that I'm new to letting, but I had no idea that an LTB mortgage was a thing. I'm off to do some research - any pertinent points to consider?

Key is in the firs word of both.

Let To Buy
Buy To Let

You are going to be letting a property you live in to buy another, hence you need a LTB mortgage.

Also, under new regulation BTL/LTB mortgages fall under either a Consumer BTL (where the property was not initially bought to let out) or a Business BTL (where the property was bought from the out set as an investment)..........Consumer BTL's fall under FCA regulation hence why some lenders do not accept them (as all BTL were previously exempt from FCA regulation)....

[C70R]

Sarnie said:

C70R said:

You've lost me completely. I'll accept that I'm new to letting, but I had no idea that an LTB mortgage was a thing. I'm off to do some research - any pertinent points to consider?

Key is in the firs word of both.

Let To Buy
Buy To Let

You are going to be letting a property you live in to buy another, hence you need a LTB mortgage.

Also, under new regulation BTL/LTB mortgages fall under either a Consumer BTL (where the property was not initially bought to let out) or a Business BTL (where the property was bought from the out set as an investment)..........Consumer BTL's fall under FCA regulation hence why some lenders do not accept them (as all BTL were previously exempt from FCA regulation)....

Thank you. From my brief research it seems that "LTB" mortgages aren't compulsory in our circumstances (nor do they even appear to be offered by all providers - many use "BTL" for exactly this situation), so we should be able to transfer over fairly easily. Unless I'm missing something obvious?

Thankfully her lenders are reasonably flexible, and we're financially comfortable - so this isn't one of those ludicrously marginal/stretching exercises.

[Sarnie]

C70R said:

Thank you. From my brief research it seems that "LTB" mortgages aren't compulsory in our circumstances

It is.

Trust me, it's my job to know

[C70R]

Interesting. That suggests some inelegant wording on the sites I've been using. Thanks.

[leemanning]

Trust him.

About 90% of Pistonheads get their mortgage through him, he knows what he's on about (some would say to a tedious degree.....)

[Jockman]

leemanning said:

Trust him.

About 90% of Pistonheads get their mortgage through him

FFS Sarnie, you're a machine !!

Oh, and yes OP, your circumstances require a good broker.

[Sarnie]

leemanning said:

(some would say to a tedious degree.....)

It's my job to know the tedious stuff.......it's stops people applying to lenders that are never going to lend to them

[C70R]

Thanks all.

Sarnie - I might be getting touch with you at some point in a few months to discuss our options.

[Sarnie]

C70R said:

Thanks all.

Sarnie - I might be getting touch with you at some point in a few months to discuss our options.

No problem at all, always happy to chat!