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Thread: Buy to let mortgages advice required

  1. #1
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    Default Buy to let mortgages advice required

    The girlfriend and are I are looking to buy a house to rent out.

    Has anyone used a buy to let mortgage and got any advice?

    I also wondered if we bought a house in the girlfriends name, and then in a years time she was to rent it out how would that effect the mortgage? Would it have to be transferred to a buy to let mortgage?

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    Moderator & Events Assistant paulhb's Avatar
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    If its not your main residence then the mortgage will have to be buy to let also there are tax implications if the net income is above £7500 I think as it is an additional income. also if it is not your main home then when you sell it there is capital gains tax to pay on the profit from the sale, you are best going to see an IFA/mortgage advisor mate

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    A buy to let must have rent that will cover the mortgage therefore I,m not sure on the tax side of it.

    If we were to buy it and put it in the girlfriends name and she lives there for a year then rent it out think we might be able to get around a buy it now mortgage?

    I think an advisor may be the best route cheers

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    Moderator & Events Assistant paulhb's Avatar
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    Any monies you receive go towards your income but the inland revenue allow a fixed amount to be offset before tax is payable but it is payable just as if you had 10 houses up for rent its seen as a business.
    If you take out a mortgage and then move out of the property and rent it you are duty bound to inform the mortgage lenders as they have first charge on the property.

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    you can move back into your property for 6 months to get around the capital gains of a second home. This needs to be legitimate as they will no doubt check if your dodging large amounts of capital gains. Im not sure if its more complicated than this but I know of a person who has used this trick when building a house, rentings it, then wanting to sell it. They "moved in" for 6 months whilst another house was being prepared. How much of that comment is true is neither here nor there but they could prove it all and passed off the large chunk of tax the would have had to pay, 40k in my estimation. Best of all for avoiding this is keeping good documentation, reciepts for all your costs, valuations and different points throughout the life of the property, whatever you can really.

    I have a buy to let with birmingham midshires (halifax basically) and its pretty competative and they gave us no hassle at all, not in the application or the maintenance of the account.

    Be aware that depending on the company you go with will apply limits to the types of tenants you allowed to accept, DHS, unemployed, benefits recievers, etc.

    I would recommend them.

    Get yourself a mortgage advisor if you want proper advice as unless we know the specifics of your situation, value of house, yield etc its hard to advise.

    Try and find a tenant youself and cut out the estate agents where possible, this will save you around 13% a month of your rent and will no doubt double your yield. I used a pre made STA which can be purchased easily online or from somewhere like WH Smiths and modified it accordingly. 6 years of landlord experience under my belt and im still glad I started it all.

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    I owned my own house for 3 years then bought another house with my fiance, so decided to rent out my old house. I contacted the morgage company and i had to change the morgage over to a buy to let morgage.

    Its cost me a fortune in repairs this past year but ive got really good tennents.

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    Don't let anyone on benefits move in, unless they have solid references. You will most likely regret it if you do.

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    Thanks for the comments we may be looking at buying a bigger house and renting my house out now so still on the cards

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    All good comments on the replies.

    One thing I would like to add is that the mortgage on your existing property (assuming you have one) will definately need to be changed to a Buy to Let otherwise if you decide not to tell the mortgage company you will be committing fraud and if they were to find out they could ask you to repay the whole of the outstanding debt in full within 30 days!!

    Assuming you have a mortgage on your existing house it can not be more that 75% of the value of the house otherwise you will have great diffuculty finding a suitable lender her will be willing to give you a mortgage.

    The rent that you receive on your 'Buy to Let' typically needs to be around 100-125% of the mortgage payment (based on an interest only mortgage) otherwise the Lender typically uses your income to calculate the loan which may prove difficult if you have another mortgage.

    Finally without boring you too much (and anyone else who reads this)..just be careful on how much debt you get into as if you intend to get a new property with your gf and for what ever reason you cannot rent your property out for a period of time you still have to pay the mortgage each month!
    Last edited by paulhb; 2nd January 2011 at 22:12. Reason: Advertising services

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    Quote Originally Posted by Pipe & Slippers View Post
    All good comments on the replies.

    One thing I would like to add is that the mortgage on your existing property (assuming you have one) will definately need to be changed to a Buy to Let otherwise if you decide not to tell the mortgage company you will be committing fraud and if they were to find out they could ask you to repay the whole of the outstanding debt in full within 30 days!!

    Assuming you have a mortgage on your existing house it can not be more that 75% of the value of the house otherwise you will have great diffuculty finding a suitable lender her will be willing to give you a mortgage.

    The rent that you receive on your 'Buy to Let' typically needs to be around 100-125% of the mortgage payment (based on an interest only mortgage) otherwise the Lender typically uses your income to calculate the loan which may prove difficult if you have another mortgage.

    Finally without boring you too much (and anyone else who reads this)..just be careful on how much debt you get into as if you intend to get a new property with your gf and for what ever reason you cannot rent your property out for a period of time you still have to pay the mortgage each month!
    I have looked into the various points you have said. I would change the mortgage on my house to BTL that way I'm covering all bases. I would give it to a rental company who gurantees a monthly rent. I know a lot of people poo poo these companies but because I work away it simply would not make sense for me to try to rent it out and I do not want the gf to try and go through that hassle. An agency have said we would get around £750pcm for the property whilst the current mortgage is £290 (Interest only that I overpay currently £700pcm on) I know the interest rate will differ on the BTL mortgage but confident the rent will cover the mortgage.

    Its just in the last 2 years I have spent 40k on the property. It was valued at £170k 3 years ago and now valued at £180k after spending 40k on it. So I want to hang onto it and sell it when the prices go up which will be a good few years but also I want to buy a bigger house with a budget of 400k whilst prices are still low.

    Trying to get your money to work for you...how hard is that!

    Thanks for the advice again

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