LiveAndLetBuy Posted March 5, 2012 Share Posted March 5, 2012 No 2 completely separate areas. They use the BTL m to fri for work for the one who still does The other is just an extra (I know) They will prob live in the one they are going to buy once the other one retires and then sell the BTL hoping it still has equity To my mind the problem is more to do with living in two different places at he same time. Really the BTL is their main residence because that's where their work is, and the other place is a weekend retreat (which they don't want to live in) They should keep the BTL if they've got a good deal on the mortgage. sell the other place and invest the money.so when the time comes they can buy somewhere they want to retire to outright. This may sound nuts but if they really want to keep two houses and they don't want to live in the BTL place at weekends then they could buy the other house they like on a BTL repayment mortgage, and then rent somewhere themselves. When the other BTL mortgage is paid off they can go and live there themselves. Quote Link to comment Share on other sites More sharing options...
jammo Posted March 5, 2012 Share Posted March 5, 2012 So this is all about speculation on rising equity, perhaps they expect house proces to double before they retire so they can finally sit on some caribbean beach reading the daily express in luxury Quote Link to comment Share on other sites More sharing options...
brighton'd Posted March 5, 2012 Author Share Posted March 5, 2012 So this is all about speculation on rising equity, perhaps they expect house proces to double before they retire so they can finally sit on some caribbean beach reading the daily express in luxury Yes they hope the BTL will have rocketed in value and they can cash it in Quote Link to comment Share on other sites More sharing options...
catdog1121 Posted March 6, 2012 Share Posted March 6, 2012 I dont think they are doing anything illegal, the tax thing is pretty mute as the BTL will not be generating any income. Most buy to let mortgages do say that you cannot live in the property and it must be available to rent. 90% LTV in the buy to let mortgage sector now is next to non existent. The only thing keeping a lot of buy to let investors out of trouble is they took out BBR + x amount for term of mortgage. Back to the original post though, in theory yes the lender could say they are living in the property and they are not meeting the terms of the loan and could call it in at any time. However it is unlikely they would do this if the mortgage is being paid on time. So thats the legal thing etc sorted. Is it financially a wise idea? good god no... when their current deal ends they will find the best or only deal will be SVR which is generally quite a bit higher than residential SVR, can they still afford this when the mortgage goes to SVR? As for buying a new house, any residential mortgage is based on your income, they take into account your out goings, as the BTL mortgage is an outgoing and they have no income for it then the new mortgage company could very well look at that, if they are porting the morgage to a new property then it is unlikely the mortgage company will actually look again into the finances so they may get away with it. So in answer, is it legal? yes, can they get away with it? As long as the lender doesnt call in the mortgage for breaking the terms then yes, will they have problems getting a new mortgage for the new property? I would guess they are porting the mortgage so however stupid it may seem I think they may get away with it, depends on the lender, Are they doing the right thing? No you are totally correct they are stretching themselves so far and relying on property price increases that are unlikely to happen in the next 5yrs and they are opening themselves up to all sorts of trouble. The turning point for them I think is if they cant afford the mortgages for what ever reason, then the bank will want to know why and if they find its because they are living in it could either call in the debt or move to an alternative higher rate, if they call it in then the house could be repossessed, the bank will not care about the 10% they think they have in equity and they could end up with nothing. Quote Link to comment Share on other sites More sharing options...
LiveAndLetBuy Posted March 6, 2012 Share Posted March 6, 2012 (edited) In their defence I'd say that if she needs to have a second place near her work during the week, then the options are either rent somewhere or buy somewhere. It might be the case that the mortgage payments are lower than what she would be paying if she rented, so it might make sense, even if the value doesn't go up. As I hinted above, the real issue is the expense of having a weekend retreat. They could just live nearer to her work so they can cut down on the expense of having to live in two different places. Edited March 6, 2012 by LiveAndLetBuy Quote Link to comment Share on other sites More sharing options...
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