[brighton'd]

kenzdawg, on 05 March 2012 - 03:46 PM, said:

125 percent rent over mortgage with accounts to prove it is usually a requirement of a btw mortgage. Astonishing if the bank has never checked. But if it became an issue could n`t she rent the second flat out to friend or family then sublet a room from her "tenant", I`m assuming it`s a two bed. That would square the accounts with the bank and HMRC surely.

Well there are no accounts as they have always lived in it.
I just wondered if when they come to apply for porting new mortgage they may see the BTL on credit check and ask to
see accounts otherwise it would be considered an outgoing? Although they bought the house they are selling when they already had BTL and no one asked them.
Am concerned as they are getting on a bit and I don't want them to get into trouble (family)

[LiveAndLetBuy]

brighton, on 05 March 2012 - 03:55 PM, said:

Well there are no accounts as they have always lived in it.
I just wondered if when they come to apply for porting new mortgage they may see the BTL on credit check and ask to
see accounts otherwise it would be considered an outgoing? Although they bought the house they are selling when they already had BTL and no one asked them.
Am concerned as they are getting on a bit and I don't want them to get into trouble (family)

Why don't they switch their existing BTL mortgage to a residential mortgage when they sell the other house, and then buy the new house on a BTL mortgage?

[brighton'd]

LiveAndLetBuy, on 05 March 2012 - 04:13 PM, said:

Why don't they switch their existing BTL mortgage to a residential mortgage when they sell the other house, and then buy the new house on a BTL mortgage?

I don't think they would even think of that.
I personally don't get the 2 house thing but thats me
I don't think they earn enough to get a repayment on the BTL as it is IO and about 90% LTV and one of them has since retired and the other retires in 6yrs
How did they get into this I'll never know
Think the BTL was all in house the developer and estate agent arranged the mortgage
Even worse it is above commercial premises and they don't think that matters!

[LiveAndLetBuy]

brighton, on 05 March 2012 - 04:17 PM, said:

I don't think they would even think of that.
I personally don't get the 2 house thing but thats me
I don't think they earn enough to get a repayment on the BTL as it is IO and about 90% LTV and one of them has since retired and the other retires in 6yrs
How did they get into this I'll never know
Think the BTL was all in house the developer and estate agent arranged the mortgage
Even worse it is above commercial premises and they don't think that matters!

Is the other property they wish to buy near enough her work so she can commute?

This post has been edited by LiveAndLetBuy: 05 March 2012 - 04:37 PM

[brighton'd]

LiveAndLetBuy, on 05 March 2012 - 04:37 PM, said:

Is the other property they wish to buy near enough her work so she can commute?

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

[Lennon]

brighton, on 05 March 2012 - 04:56 PM, said:

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

And how do they pay the mortgage on the one that they live in once they have both retired? Or how do they pay the capital if the repayment date is the same as the retirement date?

There are so many holes in this that I could use it as a fishing net...

This post has been edited by Lennon: 05 March 2012 - 05:06 PM

[brighton'd]

Lennon, on 05 March 2012 - 05:02 PM, said:

And how do they pay the mortgage on the one that they live in? Or how do they pay the capital if the repayment date is the same as the retirement date?

There are so many holes in this that I could use it as a fishing net...

Not sure
The flat (btl) they bought 4 yrs ago IO 90% LTV
They use it for work
They pay both out of salary of the one that still works
The salary covers both mortgages just nothing more and they live off the others smallish
NHS pension
The BTL started at 800 month and now is 150 but that is up soon
The other is supposed to be main residence they bought it for retiring later but don't like area so its on market
They have a;ready seen one they like if it sells and I think they will be refused mrtgage this time as they are too old and too much debt. Won't listen to me though so I am asking for advice here
to explain to them why they cold end in trouble if rates rise and prices fall
When they bought the one they are selling both were still working

[brighton'd]

I am seeing them tomorrow an hope to convince them to sell both and buy within their means

[porca misèria]

Lennon, on 05 March 2012 - 03:02 PM, said:

Indeed - what ever happened to Osborne's "Office of Tax Simplification" - have they come out with anything yet?

Yeah, they reported (IIRC) early last year. So we've had about a year to forget it ever existed.

Unless the budget later this month comes up with anything (dream on).

[mch]

>I personally don't get the 2 house thing but thats me
>I don't think they earn enough to get a repayment on the BTL as it is IO and about 90%


me neither , i hate the idea i would be using other people to buy my home but i know a few buy to let couples and they are a certain breed , obsessed with status and how big their car is and alot of its being able to say ' we have tenants ' and ' 2 houses ' or more.

Personally i see buy to let as the cancer in the uk and also one of most socially destructive aspects of the country.I think it was buy to let that killed the future of millions who wanted to own homes but pension collapse and alot of other factors come in.

I dont think its morally right to own more than one home anyway but i guess i am in the minority.I just dont agree with the ethics of it and what it does to housing prices and how that effects kids and first time buyers.

The big problems again Greed and humans who are obsessed with status.Personally i judge those with more than one home and buy to let landlords in general like i judge arms dealers and politicians and estate agents , to me they are the Parasites of humanity and i have good faith all in the next life will be homeless and suffer the same fate they force upon others.

[LiveAndLetBuy]

brighton, on 05 March 2012 - 04:56 PM, said:

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.

[jammo]

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

[brighton'd]

jammo, on 05 March 2012 - 11:34 PM, said:

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

[catdog1121]

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.

[LiveAndLetBuy]

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.

This post has been edited by LiveAndLetBuy: 06 March 2012 - 09:28 AM