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Buy to Let mortgage on remaining share of Shared ownership property
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Sean P
Posted: 27 January 2014 20:29:07(UTC)
#1

Joined: 27/01/2014(UTC)
Posts: 1
Hi all,
Im being advised I can't get a BTL mortgage on my flat which I own 25% of? Seems crazy, does anyone have any experience on this? I bought the 25% outright so have never had a mortgage but Im being told it would be viewed as a re-mortgage and as I would be a 1st time landlord I would have to have owned the place for 6 months…? Pain in the a***!
Thanks muchly,
Sean
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Kevin Moss 1000
Posted: 28 January 2014 15:27:22(UTC)
#2

Joined: 29/04/2013(UTC)
Posts: 6
The 6 month rule is common place amongst most lenders. The only exception I can remember if the Clydesdale Bank. Ask a good mortgage broker near you to check with his contact if it can be done - I have my doubts. The whole point of shared ownership to get a roof over your head , not to try to make capital gain.
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Adebayo Konu
Posted: 28 January 2014 15:37:17(UTC)
#3

Joined: 27/08/2013(UTC)
Posts: 5
There are so many factors. You own 25% and are looking for 75% mortgage? First find a lender which will lend on this basis. You must then demonstrate how and where you will live, and cover the btl mortgage. If you will be renting that would seem odd unless you were relocating. If you are buying somewhere else then where is that deposit money coming from.

Shared ownership normally means restricted income so if the bank gets a whiff of this you are sunk.

A good broker...eg mortgages for business will sort you out.
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paul kaye
Posted: 28 January 2014 17:48:30(UTC)
#4

Joined: 21/08/2009(UTC)
Posts: 20
if you have a house that is say worth £150000 and you own 25% thats £37500 of money you can raise to use for what you wish.
As you want a buy to let,you would search for a buy to let mortgage to buy a property to let out,
lets say you find a house to let out and it costs you £145000, you will find most buy to lets offer a LTV of say 60% so will lend you £87000 so you will need to find £58000
as you will have raised £37500 from your home you will still need £20500 !
you will need to use your own figures,but this is how it works.
Even if your buy to let say costs £100k and you get a 60% LTV(loan to value) you will still need to find £40k less what you have raised on your home £37500 so still need £2500
All this depends on what valuations you get for your own home to work out what they will lend you.
On top of this you will have fees,insurance,vetting tenants etc,gas certificates to worry about
the list goes on,so be aware.
Also they will want the house you are buying to let out to be valued as you are raising a mortgage on it,they may say the house is worth only £95k if so thats all you want to pay the owner ! this will then be £95k x 60%=£57000 leaving you to find £38000 less what you have raised on your home £37500 so you will still need to find £500
moral is, to buy something that will fall into what you can afford.
You cannot raise a buy to let on your own home,you can raise money to invest into another property.The only way to let your own property is to move out and tell your mortgage company or they may want you to take out a buy to let on it as this will become a buy to let,
but where do you live ? hope this helps.
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chris gurney
Posted: 29 January 2014 15:30:13(UTC)
#5

Joined: 17/09/2012(UTC)
Posts: 2
It sounds like you bought the property as a shared ownership transaction whereby a housing association or similar own the remaining 75%. If this is the case you will only be able to raise a mortgage against your 25% and it is highly likely that the housing association will prohibit letting as an investment anyway as these arrangements are designed to be affordable housing to allow first time buyers onto the ladder.

If I have misunderstood and you actually own 100% of the property on a long leasehold basis (a flat will be leasehold rather than freehold) with a 75% mortgage it may well be that initially the lender will grant a letter of authority for you to let the property as an interim measure; they may not offer 75%LTV BTL mortgages hence the refusal. The market has been moving very quickly of late (particularly around us in the South-East) and a few sensible agents valuations may surprise you on likely capital value and ease your loan-to-value requirements. Do NOT try to fudge the figures as the lenders surveyor will merely take the property back to a realistic value, the lender would refuse to offer the mortgage, and you will have paid valuation/ application fees to no avail!

If you used a broker to set up the mortgage I suggest that you go back to them for advice,
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