Having 2 mortgages

[Westyrs]

After some advice...

I currently have a repayment mortgage for a small property that I have lived in for 5 years now (the % rate is very low so I am keen to stick to this agreement). I am wanting to move out and rent this place out... Can this be done without changing the mortgage type etc? I suspect it has to be a buy to let type ?

If I get a tenant in, I want to get a second mortgage to buy another place.. Is this possible at a good rate still as I don't have much of a deposit? Anyways around having to get a buy to let mortgage as rates aren’t as good.

Any advice appreciated please.

[thekingisdead]

You are supposed to inform your current mortgage provider if you intend to rent it out. If this is acceptable to them they will bump up your interest rate accordingly (perceived higher risk to them).

If they won't accept tenants then you'll have to remortgage on a BTL. You'll need min 25% equity for this.

Your new mortgage will probably want to see proof that your existing mortgage company has given you permission to let. Some don't bother, may just want to see tax returns, or proof of rental income.

There are one or two providers who don't ask to many questions about an existing residential mortgage, or ask for evidence of permission to let, so its possible to have two residential mortgages. Don't ask me how I know this ;-)

[squicky]

You need to speak to your mortgage company - in the process of doing the same and mine has a consent to let scheme which allows us to keep pretty much the same rate but rent it out. (LTV affected the rate).

[Westyrs]

Many thanks.

Thekingisdead - don't fancy divulging such information regarding who those lenders are do you ;-)

[thekingisdead]

One of them is a large Spanish bank that buys out British banks and the other one is the 'H' part of HBOS.
:-)

That was a couple of years ago so can't guarantee what they're doing now. I used a broker who turned a blind eye to my existing residential mortgage, on the basis that I would take care of getting permission to let, but he did advise that the aforementioned providers wouldn't ask many questions.

[Westyrs]

Thanks.

So basically rent one property out whilst still on the nice rate... Then get another resi mortgage with someone else ;-) a case of, if they don't ask then just keep quiet.

Presume still be insured if I let property one out ?

[thekingisdead]

No you'll need a BTL insurance policy on the rental (buildings and ~10k contents), regardless of what type of mortgage you have on there.

[Westyrs]

I'm lost... Easily done ! Lol.

So how does one go about getting a 'btl insurance policy' on a normal residential mortgage? Can it be done?

[Kudos]

Westyrs said:

Thanks.

So basically rent one property out whilst still on the nice rate... Then get another resi mortgage with someone else ;-) a case of, if they don't ask then just keep quiet.

Presume still be insured if I let property one out ?

Mortgage fraud this is called

[Westyrs]

Thanks

[rufusgti]

Westyrs said:

I'm lost... Easily done ! Lol.

So how does one go about getting a 'btl insurance policy' on a normal residential mortgage? Can it be done?

You'd be insane to rent out a property without landlord insurance. It's slightly more expensive but if you don't have it and your tenant burns your house down your existing policy will laugh in your face. Don't go into this under insured, or there's no point paying any insurance.

When you buy a property with a mortgage The lender will want to see that it's insured. I've known people take out policy's to prove insurance and as soon as the contracts are signed rung up and upgraded to a landlord policy, enabling them to keep their resi mortgage. I know this isn't the same as your case but just highlighting how easy it is. Apparently!

[Sarnie]

Some strange 'advice' on this thread.

[Westyrs]

Sarnie - having read previous threads I see that your in this industry? Possible to drop you a PM to get some guidance please?

[Sarnie]

Westyrs said:

Sarnie - having read previous threads I see that your in this industry? Possible to drop you a PM to get some guidance please?

Of course no problem at all.

[Westyrs]

Have to be a member for 24hrs until I can email :-(

[Sarnie]

Westyrs said:

Have to be a member for 24hrs until I can email :-(

My email address is in my profile

[BoRED S2upid]

It can be done i've done it but the lender will only allow it for a short period of time if they allow it at all usual reasons will be if you move away for work and need to let the property but eventually your going to need to move to a BTL. Insurance is completely separate from mortgages.

[Sarnie]

BoRED S2upid said:

It can be done i've done it but the lender will only allow it for a short period of time if they allow it at all usual reasons will be if you move away for work and need to let the property but eventually your going to need to move to a BTL. Insurance is completely separate from mortgages.

The thing with 'Consent To Lease' is that there is no exact criteria that any one lender follows; it's entirely at the discretion of the lender. I've seen the same lender give two totally different decisions for two clients with very similar details. They will take into account;

The LTV?
How long you've had the mortgage?
Are there any early repayment charges?
Account conduct?
Is it on IO or repayment?
The expected rental?
How long you want the Consent To Lease for?
Why aren't you porting the current lenders mortgage to the new property?
Does the current lender have a BTL product range?

The lender is under no obligation to provide the CTL, why should they? They gave the mortgage on the basis that you would live in the property. A lot of lenders are very wary nowadays of backdoor BTL's where people buy a property and then want to rent it out a short while later......

[no effort]

thekingisdead said:

If they won't accept tenants then you'll have to remortgage on a BTL. You'll need min 25% equity for this.

Not true, I'm going to need to remortgage next month and at the moment I've only got 8% equity in the property according to their online valuations, they still offered me a new mortgage though at 5.59%

[thekingisdead]

no effort said:

Not true, I'm going to need to remortgage next month and at the moment I've only got 8% equity in the property according to their online valuations, they still offered me a new mortgage though at 5.59%

Fair enough, maybe I should have said you'll need 25% equity to get a competetive interest rate :-)