Interest only buy to let....and looking to get a residential mortgage

[Archie1989]

Hello,

I am looking for advice. I have a buy to let mortgage which is in negative equity. The buy to let property is usually occupied, but at the moment, the rent is 15% above the mortgage.

I would love to sell the flat, but I can’t until the area increases in value.

Since I bought it many years ago, I am now in a position where me and DH would like to buy a house to live in. We have a mortgage in principle, but I am worried about the impact of my buy to let when it comes to making this an actual mortgage!

I read that they like the buy to let to have rental income 45% above the mortgage.

Does anyone have advice on whether this will stop us getting a mortgage altogether, or just reduce the amount? I cover the mortgage when it’s empty....which is rare. At the moment it has been empty, and I could have taken a mortgage holiday with Covid - but I didn’t.

Has anyone had a similar situation?

Many thanks

It depends on the lender and their BTL criteria. It can vary quite a lot.

You’ve still got til 31/10 to apply for a mortgage holiday on your BTL.

I would find a mortgage adviser and have a chat through the options as a mortgage holiday may not be the best thing for you.

Do you have a resi mortgage as well or are you in rented accommodation?

We own the property we’re in, but the mortgage is just in my husband’s name. He bought it before we married. I pay all bills etc, which is how we work the costs between us.

So the move would mean the mortgage would be based on both our salaries and not just his.

I am keen to avoid taking the mortgage holiday on the buy to let, if I can.

If you take the mortgage holiday it may well impede your chance of the new mortgage so do not do that if you can manage it. (it is effectively flagging that you cant afford the payments) However talk to a good broker about the new mortgage as they will be more aware of lenders criteria and those that may not worry about the btl

You may also run into an additional 3% stamp duty on your new house as it’d be classed as a second property.

We condensed our buy to let mortgage down to 8 years on a fixed rate to pay it off and the rental income matches the mortgage payment exactly so I'm not sure about your 45% theory if that helps.

We condensed our buy to let mortgage down to 8 years on a fixed rate to pay it off and the rental income matches the mortgage payment exactly so I'm not sure about your 45% theory if that helps.