Renting to sister and renewing mortgage?

by Readers Question

A month ago

Renting to sister and renewing mortgage?

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Renting to sister and renewing mortgage?

My sister returned to the UK after separating from her husband in which I agreed to rent one of my properties to her which is done through a letting agent. She is not on any benefits and works part time.

I have enquired with the RBS over the phone to re new my buy to let mortgage with them as the fixed rate runs out shortly but they have an issue with this having a family member in the property. The advisor couldn’t explain how to go forward with this as his manager wasn’t in the office.

Does anyone have advice on how to address this or any other lenders that will allow a mortgage on a property with a family member?

Many thanks

Craig



Comments

Neil Patterson

A month ago

Hi Craig,

If you have a close family member rent your property it is considered a regulated or consumer mortgage and has to be treated for FCA requirements in a similar way to residential mortgages regarding the advice and documentation.

Hence fewer Buy to Let lenders offer regulated BTL mortgages but some do.

It looks likely that your current lender will want you to remortgage and if you need assistance from one of our fully qualified broker team to place this for you please feel free to email me on npatterson@property118.com

For regulation purposes a close family member is defined in the vertical as parents, grandparent, children, grandchildren and then in the horizontal as brothers and sisters.

Craig Beveridge

A month ago

Reply to the comment left by Neil Patterson at 21/05/2018 - 10:04
Thanks Neil

yew tree

A month ago

same thing has happened to me today with Lloyds
I have a BTL mortgage with them (interest only but over pay) and was looking for a better rate , told because I let to my daughter I will no longer be able to have a BTL mortgage but I could have a residential one
good bit I think the interest rate will drop to half what I am paying now (fixed for two years)
I will pay off mortgage two years early than at present
question is will I still be able to claim tax relief on the interest paid
the mortgage will be interest only but I will over pay to clear it before full term

any other pitfalls any one can see please

John Stallan

A month ago

Hello Craig,
As Neil has said, it's a regulated BTL mortgage you'll require. Some lenders allow you to take a product from their residential range yet classify it as BTL and place it as Interest only.

Regards, John

Puzzler

4 weeks ago

I have recently read that Mansfield Building Society have launched family mortgages - see a broker

Reply to the comment left by Puzzler at 24/05/2018 - 13:12
And available via us, long standing mortgage referral partners of Property118.

Some of Mansfield's Family Mortgage criteria is as follows;

Rental income alone must be at least 100% of the monthly mortgage payment calculated at product pay rate (currently 4.24%) on an interest only basis

AVAILABLE FOR REGULATED BUY TO LET (Property let to a close relative - i.e. spouse or civil partner, children, parents, brothers and sisters) • NOT AVAILABLE FOR CONSUMER, BUSINESS BUY TO LET

Up to a maximum of 5 BTL properties allowed with lender providing the total mortgages with them do not exceed £1million. Up to a maximum of 15 BTL mortgages remaining outstanding with other lenders are accepted.

Flat-Maisonettes - Max LTV increased to 90% for converted and purpose built units, subject to valuation and full underwriting assessment.

Not available on New Build city centre flats.

Only available for property to be let to a close relative (i.e. spouse or civil partner, children, parents, brothers and sisters) and for landlords using earned income or other personal wealth in addition to rental income (Top Slicing)

For a personalised advice and quote service, contact my Team via my profile link above.

Craig Beveridge

4 weeks ago

Reply to the comment left by Puzzler at 24/05/2018 - 13:12
States on their website "Buy to Let mortgage products for landlords throughout England and Wales" Unfortunately all my properties are in Edinburgh where property prices are sky high and the rental sector booming..

Dinesh Patel

4 weeks ago

We have a similar problem as our son want's to move into a BTL which is interest only in joint names my two sons and myself and wife (4). The title deeds have all 4 names. There is outstanding mortgage which as his age is younger would like to take the mtg over and he becomes principally the only payer to the mtg. What is the likely hood in him getting the mtg and the title deeds names all 4 remains the same?


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