# Mortgage Advice



## rf860 (Jul 24, 2011)

Hi all,

Thought i'd ask this on here as there is hopefully some of you guys with the right knowledge who could help.

I currently have a mortgage on a fixed rate, two year term. This is coming to an end early July so need to get something in place soon to avoid the huge increase in interest rate for not being in a contract.

I currently do not live in the property and i do not plan on moving back into it either - it is rented out and i intend to keep it that way for the foreseeable future. I am living in new zealand at the moment and do not own any other property. 

My question is, what sort of mortgage can i take out? I've read that you can get a buy to let mortgage even if you don't own another property?

To complicate matters further, within the next year i will be returning to the uk and will be looking to buy another house for me to live in - so whatever mortgage i take out now must not effect my borrowing power too much for my future purchase. 

Am I asking too much?? I should probably point out that my income now has almost doubled from what it was when i first got the mortgage.


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## danwel (Feb 18, 2007)

Whatever mortgage you take out this year will almost certainly affect your borrowing next year for the house you want to live in. The reason being as you are after two mortgages thus increasing the financial risk


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## m4rkymark (Aug 17, 2014)

I Think the only mortgage you can get will be a buy to let mortgage, I don't believe most lenders will let you take a standard mortgage out and rent it out? Have you told your lenders you are renting your house out?

Sorry I don't know if having a buy to let mortgage will affect your borrowing power because BTL mortgages are normally based on how much rent you are charging in relation to the mortgage repayments.


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## rf860 (Jul 24, 2011)

danwel said:


> Whatever mortgage you take out this year will almost certainly affect your borrowing next year for the house you want to live in. The reason being as you are after two mortgages thus increasing the financial risk


I'm aware that it will affect my borrowing, I just want to pick the option that will not affect my borrowing power too much.



m4rkymark said:


> I Think the only mortgage you can get will be a buy to let mortgage, I don't believe most lenders will let you take a standard mortgage out and rent it out? Have you told your lenders you are renting your house out?


I'm not sure to be honest! A potential stumbling block could be that i think BTL requires the lender to be at least 25 and i'm 24 years old. I haven't told them no, i was advised not to by my letting agent - it's not something i'm overly comfortable with tbh.


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## MDC250 (Jan 4, 2014)

m4rkymark said:


> Have you told your lenders you are renting your house out?


If you haven't and they find out, don't be surprised if they back date interest rates at a higher rate than what you've been paying.

On a BTL you usually have to have the mortgage covered and then more in terms of the monthly rental. When I last looked into it a good few years back it was 125%.

On a mortgage generally, lenders are most concerned with affordability, if you are stretched too mutch they will get gittery.


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## rf860 (Jul 24, 2011)

MDC250 said:


> If you haven't and they find out, don't be surprised if they back date interest rates at a higher rate than what you've been paying.
> 
> On a BTL you usually have to have the mortgage covered and then more in terms of the monthly rental. When I last looked into it a good few years back it was 125%.
> 
> On a mortgage generally, lenders are most concerned with affordability, if you are stretched too mutch they will get gittery.


Having briefly looked at BTL mortgage, it appears to be still around 125%. That shouldn't be a problem i'm currently getting 200%+ but will have to bring that down slightly due to downturn in local market.

I'm pretty cautious with money (i'm a quantity surveyor!) - i don't think affordability will be a problem at the value of my house and the potential purchase price of my next house.


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## MDC250 (Jan 4, 2014)

Can only see rental demand going up in the short to medium term with rates set to rise at some point so it looks like you could be sitting pretty


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## m4rkymark (Aug 17, 2014)

I think house prices are set for a bit of a fall but it sounds like you have plenty wiggle room - if we leave the EU will it affect prices? some say it will others say it wont. I don't think rates will rise much in the near future.

if your lender finds out your renting out they may not renew your mortgage and force you to go elsewhere... I wouldn't have thought your letting agent should be telling you to do that.


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## adlem (Jul 6, 2008)

Your letting agent was wrong to tell you not to notify them. If you are renting out you have to have it on a buy to let mortgage. As mentioned there will be a percentage worked on mortgage payment compared to rental income to get it to work. 

Having a buy to let mortgage on your rental property won't stop you getting a normal mortgage for your own residence, but it may affect how much you can borrow on an affordability scale. My other half works for a financial advisors so knows a bit more than me but that's what I've gathered


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## pxr5 (Feb 13, 2012)

I lived overseas and owned a house in the UK that was rented out. I didn't need a BTL, rather a consent to lease. I don't know if these still exist, but as it was my only property at the time it was allowed by the mortgage people, but I had to notify them.


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## rf860 (Jul 24, 2011)

m4rkymark said:


> I think house prices are set for a bit of a fall but it sounds like you have plenty wiggle room - if we leave the EU will it affect prices? some say it will others say it wont. I don't think rates will rise much in the near future.
> 
> if your lender finds out your renting out they may not renew your mortgage and force you to go elsewhere... I wouldn't have thought your letting agent should be telling you to do that.


House prices are falling fast in Aberdeen due to the price drop in oil. Unfortunately i bought when the market was at a peak so currently not keen on selling.

Yeah, you might be right with that. They have given wrong advice i agree - it would seem that it's put me into a bit of a situation!



adlem said:


> Your letting agent was wrong to tell you not to notify them. If you are renting out you have to have it on a buy to let mortgage. As mentioned there will be a percentage worked on mortgage payment compared to rental income to get it to work.
> 
> Having a buy to let mortgage on your rental property won't stop you getting a normal mortgage for your own residence, but it may affect how much you can borrow on an affordability scale. My other half works for a financial advisors so knows a bit more than me but that's what I've gathered


I'm not sure i can get a BTL due to the age restriction.

Yeah that is what i thought was the case. I wonder how much it would affect my buying power having an existing repayment mortgage.



pxr5 said:


> I lived overseas and owned a house in the UK that was rented out. I didn't need a BTL, rather a consent to lease. I don't know if these still exist, but as it was my only property at the time it was allowed by the mortgage people, but I had to notify them.


Was yours an existing mortgage and you requested the consent to lease? or did you get a mortgage with this proviso? Did it cost you any extra?


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## pxr5 (Feb 13, 2012)

rf860 said:


> Was yours an existing mortgage and you requested the consent to lease? or did you get a mortgage with this proviso? Did it cost you any extra?


I arranged the mortgage out knowing I would be renting it out immediately. It was my only property (and mortgage). We consulted the mortgage company and it was they who advised a consent to lease. The mortgage was just a normal mortgage and we didn't pay any extra. As I said I don't know the rules now, but it would be worth checking out before a BTL.

The rules on consent to lease were quite strict at the time:

It had to be your only property
There had to be a reason why you couldn't live in it (for me working away, overseas)
If I had moved back to the UK and bought another house to live in the consent to lease would end
It was a stipulation from the letting agent that we used that we had a consent to lease from the mortgage company (they even held a copy).


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## m4rkymark (Aug 17, 2014)

rf860 said:


> House prices are falling fast in Aberdeen due to the price drop in oil. Unfortunately i bought when the market was at a peak so currently not keen on selling.


yes Aberdeen is in a bit of a quandary just now, ive got quite a few friends who live there and things do seem a bit dire. I believe conditions are favourable if you want a 2nd hand audi though 

I can understand why you wouldn't be keen to sell just now, I guess you have the added unknown that if you keep a hold of the house how far will the market fall? will oil pick up again and Aberdeen go back to the way it was - inevitably no I don't believe so.

good luck with whatever you decide to do.


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## rf860 (Jul 24, 2011)

m4rkymark said:


> yes Aberdeen is in a bit of a quandary just now, ive got quite a few friends who live there and things do seem a bit dire. I believe conditions are favourable if you want a 2nd hand audi though
> 
> I can understand why you wouldn't be keen to sell just now, I guess you have the added unknown that if you keep a hold of the house how far will the market fall? will oil pick up again and Aberdeen go back to the way it was - inevitably no I don't believe so.
> 
> good luck with whatever you decide to do.


It's pretty depressing to be honest.

Ha ha, i bet the cars in Aberdeen are cheaper than the rest of the country just now, not so long ago they'd be the most expensive.

If I sold just now i'd not loose that much, i think i'd get slightly more than what i paid for it, however i did have to spend a few £k on it to bring it up to standard, also got to factor in the agent and legal fees as well.

There is a load of new houses being built round the corner. The developer must be pretty optimistic as the prices haven't budged since the oil price dropped. The equivalent to my house is going for about £37k more than what i paid for mine!

Interesting that you think the market will never rise again. What makes you think that?


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