Anyone remortgaged to do a let to buy?

[LyraSilvertongue]

We want to remortgage our house to release enough capital to buy another one. We would need to get permission to let it straight after receiving the funds.
Because of this our financial adviser says we'd have to get a buy to let mortgage but the rates are about 2% higher than residential mortgages and would make it unaffordable.
Has anyone done this and did you get permission to let it straight away?
Any help gratefully received.

Anyone?

we kept our first house and rented it out and brought a second to live in.
Slightly different as we rented 1st house out while abroard for a few years and then came back and brought 2nd house, so 1st house already had a history of rental income and we also didn't need to release any equity from it.
We didn't get a buy-to-let mortgage though, we just kept on the same mortgage and applied for permission to let every three years (which was an extra cost). Never had any problems with permission to let - I figure that if they get their money they aren't bothered.

what do you mean, hanaflower?

Could you up mortgage on existing home, move into new one and take as much mortgage with you to make letting old one viable?

Anything involving bank permissions usually takes longer than necessary.

are you serious You want to risk your home in what is one of the biggest asset bubbles in history to buy another which will also fall and leave you in negative equity?Unless you have masses of cash which i assume you don't if you need to remortgage your current home but are already worried about a 2% increase in interst.

We won't be in negative equity, even if property falls 30%.

You don't have enough though to remortgage house 1 and buy house 2 outright and prices are really going to fall.It isn't a maybe.You need to do calculations based on likelihood of letting and how long you could withstand a void period plus all maintenance etc.If you can cover this then its your call but if you are in it for the long term and don't expect to make money on either house it is ok but BofE are also indicating that interest rates will need to rise so factor that in too

We've factored in all those things.
I was interested in whether anyone's done a let to buy, not whether we should be taking out a mortgage at all. It's to buy our dream house and this chance will not come up again. So it has to be now, credit crunch or no credit crunch. we've already negotiated £65k off the asking price.
What we need to figure out is how best to split our equity between the two properties and whether we'd get permission straight away to let our current house out.

As per my post, and experience, I think you would get permission - or you could rent without? Though I think that could give insurance problems.
Also, you will get tax relief on the interest on the rented house (against the rental income) whereas you won't on your home, so depending on the mortgage rates you need to factor that in - the rental home should have the higher mortgage. I think I am right in saying you can't get relief for more than the original cost, and some tax areas don't like giving you relief for more than the original mortgage - but check this out with a tax specialist.

oh sorry i thought it was buy to let didn't read it properly.You would need to remortgae to get the £ and then either ask permission to let it but the more likely scenario atm is that they will make you convert to a buy to let mortgage as all banks aer trying to raise funds atm.Only you can decide really and why would the dream house not be available at a later date cheaper?They have already lowered it by 65k so they know which way prices are going

Yes we did this as moved in a hurry, but back in 2000. Abbey gave us permission to let very quickly, it lasted for 4 years. We then decided that we would keep going long term and have now gone onto buy to let. Just in the middle of re-mortgaging on this and it has been very hard going this time round compared to last time. We do now have a mortgage offer from Bristol & West for a 3 year fix of 6.19%.

I would have thought these days with things as they are there is no guarantee that your lender will give you consent. I have read of a couple of people being turned down for it recently, don't know what lenders.

But quite frankly there is absolutely no way on earth that I would contemplate doing this at the moment. Ours was 8 years ago and it is a complete PITA quite frequently. I would have sold up when the going was good but we let to two single Mums on a long term basis and I wouldn't dream of pulling the rug from them. I think you are being very brave doing this atm, good luck.

Noddy, because it's the only unmodernised house in the street and that's the only reason it's within our budget. It's a prime location. We've already nearly lost it to two other buyers but those sales both fell through for various reasons so now's our chance to swoop in and grab it before someone else does.

ours was also several years ago (started in 1997 when we went abroad, took our new mortgage in 2001). We sold ours in 2006 when our long term tenant moved out as we didn't want the hassle that could have come along with new tenants.
Can you go for a higher mortgage on the new house and give a 2nd charge on the 1st one?

Thanks chocolateteapot.
I'm thinking maybe we'll let it out anyway, consent or no consent, but I'm worried about it having implications for insurance purposes, should the place burn down or something.

I'm thinking applying for further money with our current lender might be the way to go. that way we could apply for consent having already been customers of theirs for 2.5 years.
They've already turned us down once but we could reduce the amount and try again.

do you have me on ignore LS??

what about slashing price of house one for a quick sale and negotiating a big discount off dream house?If you have only had house 1 2.5 yrs i think the alternative is too risky and tbh there will be other houses I have had a few 'this is our only chance' houses this year and there are always others

No, of course not. Your input has been much appreciated.

No, we need this one. We've seen others we 'had to have' but this one is different. Perfect location, where we've always wanted to live since we moved here.

Do you have a lot of equity in your current house?

I have just done what you are proposing to do. I remortgaged our London home on a buy to let, started marketing the house with two different lettings agents. Basically, I contacted a few banks, Barclays and HSBC which I bank with (I had my mortgage with barclays, but they changed all their mortgage products to woolwich during the take over) and got a few quotes. The quotes were not much different from my residential mortgage.
The lettings agents gave me a quote for achiavable rent, and the mortgage company (I chose to remortgage with barclays/woolwich on a buy to let interest only mortgage) sent out their surveyor to asses the rent they thought the property could achieve, and they offered a mortgage based on that. I have now completed on the mortgage, the tenants have moved in, and I am getting a large sum of money on monday which will go towards my self build.

We can let the house for 3 years before becoming eligible for capital gains tax on the sales value. By then, I hope the market have recovered.

re the capital gain tax bit - even after the 3 years you would only be taxed on a percentage based on the number of years it wasn't your main residence (less 3), and you would also get lettings relief upto £40,000 (so £80,000 if joint).
We didn't pay any CGT on the sale of ours with the various reliefs.

That's good to know CS.
QS, we're keen to avoid buy to let. We want to do let to buy, which is a relatively new term but becoming a more popular option among people who are having difficulty selling their properties.

Right, I havent heard about that term. Good Luck!