Buy to let mortgage for my retired mother

[nsa]

My mother owns two houses:

£415k - £200k Northern Rock mortgage @5.49%. £12k tax free income from govt for special needs tenant (Mum lives here too)
£215k - £65k NR mortgage @5.49%. £9k potential total rental

66yrs old, pension £9k per year. Total income £12+9+9= £36k, interest payments currently £14.5k

Houses £415+215 = £630k, mortgage £200+65 = £265k = LTV 42% = 7.4x income

She's had an interest only NR mortgage since 2002. It's ridiculous but she has found it difficult to switch because her main income until now has been looking after people with learning disabilities. I'm not sure why this is an issue but she says it is. It appears unlikely that she can afford a 15yr repayment mortgage and I think banks won't lend if the borrower is >85yrs at maturity.

I need to get her refinanced and to start paying down the debt. She will live in one house with one tenant and rent out the other. I can guarantee the mortgage but I live overseas.

Any thoughts gratefully received. I'll speak to a financial adviser eventually but I want to go in prepared.

[JeffreyD]

Seems obvious to sell the second to pay down the mortgage on the first.

[nsa]

I agree but her plan is to live in the bigger one with a tenant until she's too old to manage, then move into the smaller one and rent the bigger one out. She's also keen to stay in property as an investment.

[JeffreyD]

nsa said:

I agree but her plan is to live in the bigger one with a tenant until she's too old to manage, then move into the smaller one and rent the bigger one out. She's also keen to stay in property as an investment.

Sounds expensive, even if it's possible.

If you are in the position lend her the dough yourself/ or secure it as mentioned in the op.

[aka_kerrly]

nsa said:

My mother owns two houses:

£415k - £200k Northern Rock mortgage @5.49%. £12k tax free income from govt for special needs tenant (Mum lives here too)
£215k - £65k NR mortgage @5.49%. £9k potential total rental

66yrs old, pension £9k per year. Total income £12+9+9= £36k, interest payments currently £14.5k

Houses £415+215 = £630k, mortgage £200+65 = £265k = LTV 42% = 7.4x income

She's had an interest only NR mortgage since 2002. It's ridiculous

she gets £12k government grant, £9k pension and £9k rental from the property she isn't living in.

The problem there is it is not possible to live in a property that you have a btl mortgage on and getting a interest only residential mortgage is rather challenging, thus trying to remortgage the big property will require her to prove her income and that it is sustainable beyond retirement/end of term.

With the second smaller property nearly all lenders have a minimum income requirement of £25k that doesn't include the expected rental income. The Mortgage Works don't have a minimum income but have tighter stress testing , if your mum does self assessment then her accounts will be essential.

[wisbech]

She probably needs a new plan...

[dmahon]

They are stingingly expensive mortgage rates no? You can borrow at 1% for residential and 1.5% for BTL. Is it a sub prime product?

[JezHill]

[/quote]
The Mortgage Works don't have a minimum income but have tighter stress testing.
[/quote]

From what I can see your mums situation passes their stress testing, with no minimum income as a lower rate tax payer. This will give much lower rates, but is dependent on both properties being let.

I would PM Sarnie on here who could put in an AIP to find out..

[Killer2005]

If you plan to put a family member in it then you would need a regulated BTL. Standard BTLs don't allow for family let's.

[Sarnie]

nsa said:

My mother owns two houses:

£415k - £200k Northern Rock mortgage @5.49%. £12k tax free income from govt for special needs tenant (Mum lives here too)
£215k - £65k NR mortgage @5.49%. £9k potential total rental

66yrs old, pension £9k per year. Total income £12+9+9= £36k, interest payments currently £14.5k

Houses £415+215 = £630k, mortgage £200+65 = £265k = LTV 42% = 7.4x income

She's had an interest only NR mortgage since 2002. It's ridiculous but she has found it difficult to switch because her main income until now has been looking after people with learning disabilities. I'm not sure why this is an issue but she says it is. It appears unlikely that she can afford a 15yr repayment mortgage and I think banks won't lend if the borrower is >85yrs at maturity.

I need to get her refinanced and to start paying down the debt. She will live in one house with one tenant and rent out the other. I can guarantee the mortgage but I live overseas.

Any thoughts gratefully received. I'll speak to a financial adviser eventually but I want to go in prepared.

I can help with this if you want to drop me a line.

Most lenders do have minimum income requirements that she wouldn't meet but there are a small number of lenders who do not have this requirement.

Also, as someone has already mentioned, she would not be allowed to move into the BTL property in the future. She would need to remortgage it onto a Residential product which would be difficult now, moreso when she's older. She would also then need to remortgage the current home onto a BTL or get Consent To Let from NR........as the years tick by, the harder the above gets......I agree with the poster who said she may need a different plan......one that is decided upon and actioned now......unless she can get the mortgage(s) paid off somehow........

[nsa]

Thanks. I'll send you a PM.

[MR2 Steve]

Is it possible for the special needs person to live in the smaller house with her? If she sells the bigger house she nets £150k if she clears the mortgages. And would end up with the same income of c.£21k plus £150k in the bank.

[superlightr]

Sarnie said:

I can help with this if you want to drop me a line.

Most lenders do have mini

Hi Ive taken the opportunity of also dropping an email for work. thx

[Sarnie]

superlightr said:

Hi Ive taken the opportunity of also dropping an email for work. thx

I've tried to reply to your mail but it keeps bouncing back.........

[superlightr]

Sarnie said:

superlightr said:

Hi Ive taken the opportunity of also dropping an email for work. thx

I've tried to reply to your mail but it keeps bouncing back.........

resent with an email in the text.