# Buying to Let



## mba (Jun 17, 2006)

I am looking at investing in property with the option to rent.

Looking at buy to let mortgages i am looking at least a 20% deposit with a rate of 5.6%. *However* going the "mormal" mortgage route i could buy the house with the same deposit but a rate of 2.95%.

What are the implications of getting a normal mortgage and then renting it? Is there a time period by after which i can rent it?

M


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## Nickos (Apr 27, 2006)

The bank can usually penalise you i believe if found out as your outside their T&Cs.

It may also lead to voided insurance, for example, if a tenant was staying there, left the fire on and it burned down. Your insurance may not honour the cover as your supposed to be living there.

I believe insurance companies supply rental insurance though regardless of mortgage type....


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## DiscoDriver (Oct 27, 2009)

If you have the equity available in your current house you could remortgage that to free up the cash and then use it to buy the rental property. That way you don't actually have a buy-to-let mortgage and so won't fall foul of the mortgage provider's T&Cs.


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## mba (Jun 17, 2006)

DiscoDriver said:


> If you have the equity available in your current house you could remortgage that to free up the cash and then use it to buy the rental property. That way you don't actually have a buy-to-let mortgage and so won't fall foul of the mortgage provider's T&Cs.


Thats a very good point, thanks :thumb:

However i do not have enough equity in the house (plus my cash) to buy the house outright


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## Roswell (Aug 11, 2008)

even if you did have the equity are you willing toy let your equity live in the hands of your tennants ? also thier may be tax advantages to haveing a loan on the property. eg offest your tax obligations on the income against the interest on the loan making your loan effectively 0%


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## lofty (Jun 19, 2007)

Alot of banks wont let you remortgage to buy another home.It is like getting blood from a stone at the moment trying to get anything other than a normal domestic mortgage.A buy to let should be straight forward but your rental income must be 125% of the cost of the mortgage you take out on the property,(e.g mortgage £400 a month, rent must be at least £500 per month )and you will need a minimum of 25%deposit.


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## EliteCarCare (Aug 25, 2006)

Not a good idea as you need to declare this as a commercial property and not a residential one (ie, you don't like there). The Insurance also has to be of a commercial nature, otherwise if the worst happens they'll give you nothing and declare the policy void.

Yes the interest is higher on a buy-to-let mortgage but the interest payment on the loan is tax deductible (the capital repayment proportion isn't).

There are some better deals slowing appearing as the housing market is starting to recover, so shop around and see what you can get. 

Alex :thumb:


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