Am I taking the correct steps?

by Readers Question

3 years ago

Am I taking the correct steps?

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Am I taking the correct steps?

We have 2 properties on joint mortgage. One of them is Residential mortgage (Property A) and other on Buy-to Let (Property B). We were out of the country between August 2010-April 2013. During this period, I was renting out both the properties without changing the mortgages. We moved back to UK last year in April 2013. After our arrival, we couldn’t stay in our residential property due to couple of reasons. Am I taking the correct steps?

1. The tenancy contract for residential property (Property A) was renewed for one full year just before our arrival
2. The rental contract was finishing on our Buy to let (Property B) mortgage property and it was in the area with better school. (as school was our priority).

So we decided to move into our Buy to Let property but couldn’t change our mortgage from Buy to Let to Residential as most of the lenders require minimum 1 or 2 years record for self employed professional (my wife is a director of the company which we incorporated in October 2013.)

Similarly we couldn’t change our residential mortgage to buy to let as there is not enough equity in the property (i.e. 75% LTV)

As my wife’s company is completing one year of trading in this month, we are in the position to show one year’s account for her as well as my employed income. With proof of income for both of us, we would like to get our mortgages straight i.e. convert our Buy to Let mortgage on residential mortgage (where we are currently living) and sell our residential property (which is currently rented). Similarly, we would like to get some equity (£70-80K) out while re-mortgaging our buy to let and add it to the profit (£70-80K) generated from sale of our residential.

We would like to invest this money into bigger property with good rental return as well as property with extension potential.

I would like to know if I am taking correct steps to come out of this mess at the moment and am I doing correct things towards building my property portfolio?

Are there any better options available for me?

Thanks

Salil

Comments

Mark Alexander

3 years ago

Hi Salil

I think you have been lucky.

If you can get new mortgages then your plan makes a lot of sense. You need to talk to a whole of market mortgage broker for some advice.

If you can't get mortgages then I'd suggest you write to your lenders and seek permission to reside in the BTL and to let your former home. If they say no then you may wish to consider selling your former home anyway and moving out of the one with a BTL mortgage on it, re-let it until you can remortgage it and rent somewhere else to live in until such time as you can get mortgages.

I also recommend you to take professional tax advice if/when you do sell your former home as some CGT may be due.
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Howard Reuben

3 years ago

You may not need new mortgages at all anyway.

You've mentioned keeping, selling and capital raising, so there are a few issues to deal with, however if everything was to stay 'as is' then you could possibly 'update' your 'resi' mortgage, and could possibly apply for 'consent to let' and leave that current mortgage in situ.

Similarly, your current BTL lender needs to be told of your intention to move in to the property and they may simply agree to allow this too.

A decent Broker will always look at your current lenders as well as seeking new lenders, to present the full range of options to you.

My Firm is well placed (by way of experience as well as geography) to be able to assist.

Our contact details can be found in my profile link.

In addition to securing he best mortgage advice, tax planning is also crucial (especially if you're thinking of selling). Finally I would also suggest proper life cover and estate planning too, and we can help with that as well.

Hope that helps.

Howard

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