Buy To Let Mortgage Non-Home Owner

by Readers Question

22:08 PM, 9th March 2015
About 4 years ago

Buy To Let Mortgage Non-Home Owner

Make Text Bigger
Buy To Let Mortgage Non-Home Owner

I am hoping someone can explain this better. Buy To Let Mortgage Non-Home Owner

I am married, own my own home that my family resides in and own a 2nd home on a buy to let mortgage that is rented out.

I would now like to purchase a 3rd property that will be another buy to let investment.

As my wife is a lower earner than me, it makes sense for her to be the owner to reduce rental income tax liability. However, my broker has said she won’t get a mortgage because she isn’t a home owner.

Now, whilst my wife isn’t a home owner (I am the sole owner of our residential home, I bought it before we were married), in my eyes my broker is saying my wife can never become a buy to let investor!

Is this really the case? I realise I could sign over part of the residential home to her, but this would only complicate our existing mortgage and incur legal fees. Surely this is not necessary?

Will anyone care to comment or offer advice please?

Thanks

Kevin



Comments

Mark Alexander

22:12 PM, 9th March 2015
About 4 years ago

Hi Kevin

Good news!

The solution to this problem is actually very simple.

Buy the property in your joint names, you as the first applicant on the mortgage and your wife as the second. Tell the solicitor that the ownership needs to be as tenants in common as opposed to joint tenancy and that your wife will own a share is 99% of the property and that yours will be 1%.

The mortgage lenders will not have a problem with this.

We have a joint venture partnership with this specialist conveyancing company who do deals like this regularly so please contact them for a quote >>> http://buytoletconveyancing.co.uk/
.

Kevin Clarke

22:56 PM, 9th March 2015
About 4 years ago

Thanks Mark. I had heard of the 99/1 split before but you have made it clearer. There is one other complication to this though. If I am sole owner my broker has found an 80% LTV product. But in joint names he seems to think only a 75% LTV is possible. Is that usual?

Howard Reuben CeMap CeRER

0:28 AM, 10th March 2015
About 4 years ago

and good news part 2....

there are BTL mortgage lenders who will allow non-owner occupiers to have a BTL mortgage too - you just have to speak to the right mortgage broker who knows the market.

Extract taken tonight from just one of the lenders who offer BTL mortgages to first time buyers / first time landlords states;

"Eligibility
Minimum age 18 years
Maximum age at the end of the mortgage term is 75 years.
Three years’ address history.
Maximum of 4 applicants
First time landlords are accepted
No Requirement to be an Owner Occupier"

For more details;

http://www.property118.com/member/?id=314

Mark Alexander

8:38 AM, 10th March 2015
About 4 years ago

Reply to the comment left by "Kevin Mellor" at "09/03/2015 - 22:56":

Hi Kevin

I couldn't really say as I retired from broking in 2009 so I don't have the systems or in depth knowledge of the criteria of mortgage lenders these days. Howard is a good broker though (see comment above) so you really ought to contact him via his member profile.

You should also consider what LTV works best for you by using our landlords calculator in associated with products recommended by your chosen broker(s) - see >>> http://www.property118.com/calculating-rental-yields-and-returns/

Question for Howard - does the mortgage product you have mentioned above not have a minimum income criteria?
.

Howard Reuben CeMap CeRER

9:22 AM, 10th March 2015
About 4 years ago

Hi Mark

The particular mortgage I referred to does indeed have a minimum income requirement.

Their criteria states;

"Income

Single or multiple applicants: one of the applicants must have a minimum basic income of at least £30,000 per year

Applicants with 4 or more buy to lets: a minimum income of £75,000 applies.

Please note that we require evidence of income for all applications."

So, this may still work for Kevin and his wife because the question above says "As my wife is a lower earner than me" and because it didn't say "my wife does not earn an income" so my reply may indeed be appropriate.

Hopefully the answers I provide help the wider readership and the varying circumstances anyway.

Howard

Mark Alexander

9:33 AM, 10th March 2015
About 4 years ago

Reply to the comment left by "Howard Reuben" at "10/03/2015 - 09:22":

Thanks Howard, as I thought.

Hopefully Kevin will make contact with you in order to discuss a variety of options available to him and his wife. It seems there may be several ways to progress this which is great news for Kevin.

My gut feeling is that the 99:1 ownership structure will provide several more options. I am intrigued to learn how this one will play out.

Thanks for researching and responding to my question so quickly 🙂
.

Kevin Clarke

9:38 AM, 10th March 2015
About 4 years ago

Hi,

first, please can I thank you both for your very helpful comments. I am glad I came to Property118 looking for advice as it is clear to me now that I am, for want of a better phase, "playing with the big boys" and really getting in to the details of a specialist area.

Howard, i have left you my contact details and welcome your call. I have also left a message for the conveyancers mentioned.

Thanks again

Kevin

Kevin Clarke

10:21 AM, 10th March 2015
About 4 years ago

Reply to the comment left by "Kevin Clarke" at "10/03/2015 - 09:38":

Thank you both again for your advice. I have just had a very fruitful conversation with Howard who has been able to answer all of my questions. It certainly seems there are are possibilities for people in my situation.

Howard, thank you for your time. If anybody is in a similar situation I recommend you contact Howard for assistance.

Mark Alexander

10:34 AM, 10th March 2015
About 4 years ago

Reply to the comment left by "Kevin Clarke" at "10/03/2015 - 10:21":

Hi Kevin

Thanks for the update, this is music to my ears because it shows that our mission to facilitate the sharing of best practice is working well for both our readers and our sponsors 🙂
.

Mandy Thomson

14:40 PM, 11th March 2015
About 4 years ago

Reply to the comment left by "Mark Alexander" at "09/03/2015 - 22:12":

Hi Mark

You said, "Buy the property in your joint names, you as the first applicant on the mortgage and your wife as the second. Tell the solicitor that the ownership needs to be as tenants in common as opposed to joint tenancy and that your wife will own a share is 99% of the property and that yours will be 1%.

The mortgage lenders will not have a problem with this."

Does this also work for avoiding CGT liability against a transfer of equity of a part share?

Thanks,
Mandy

1 2

Leave Comments

Please Log-In OR Become a member to reply to comments or subscribe to new comment notifications.

Forgotten your password?

OR

BECOME A MEMBER

And the landlord vote goes to - ?

The Landlords Union

Become a Member, it's FREE

Our mission is to facilitate the sharing of best practice amongst UK landlords, tenants and letting agents

Learn More