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Our property investment expert is Jeni Browne, Sales Director at
Mortgages for Business
www.mortgagesforbusiness.co.uk
Tel: 0345 345 6788
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Question
What type of mortgage should we switch to?
We own a four-bed semi-detached buy-to-let property locally which has been let to our daughter’s divorced/ex-husband via an AST for a number of years.
He had a stroke in 2018/19 but was able to resume work. However, he was made redundant in August 2021.
Our daughter (a care worker, so her wages aren’t that high) moved in to help support him – contributing 50% of the rent and other household expenses.
The fixed-rate buy-to-let mortgage has now ended, it’s moved to a higher variable rate. Can we simply take on another fixed-rate buy-to-let mortgage as the ASTA is in her ex-husband’s name.
Does it now have to be a Regulated Mortgage as our daughter is living with him?
We’ve been told we could add our daughter to the deeds: she lives there, pays 50% towards the mortgage and her ex-husband pays the other half as a ‘lodger’?
Is this possible? What’s the best way around all this?
Answer
This is a tricky one to answer concisely because there are many different factors that would influence how we approach this. As your daughter is living there, the property would need a regulated mortgage, regardless of whether her name is on the AST.
Generally, lenders who accept this structure will look at your own affordability for paying the mortgage rather than the actual rent – this will take into account both your income and all of your financial commitments.
If you add your daughter to the deeds, then this becomes a residential mortgage and would be underwritten on the strength of all your incomes and commitments.
In short, I would encourage you to speak to a mortgage broker who can run through your financials and determine your best course of action.
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Question
Can I purchase a buy-to-let in retirement?
I’ve been considering getting into the buy-to-let market as a way to fund my retirement. I retire in 2024 and had planned to buy a property in the next few months, whilst I still have a decent income from my employer.
However, with all the instability in the market with mortgages and house prices at the moment I have decided it may be safer to leave it a year or two. This means I’ll be buying a property and taking out a mortgage after I’ve retired. Do you know if this will restrict my ability to take out a mortgage?
Although I don’t have a property to purchase I am looking at putting down approximately 50% as a deposit. Thanks for any advice.
Answer
You will be absolutely fine. These days, most buy to let lenders are happy to lend to someone who has an income, but have no requirements about how much this should be.
On the assumption that you will receive a pension, you will have a good level of choice in terms of lenders from which to choose. Good luck and enjoy that well-earned retirement!
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Question
Diversifying into HMO: What do I need to know?
I’m a landlord of 15 years and I have three buy-to-let properties. I am now looking at diversifying my portfolio and would like to try a student let.
I have two questions for you. Firstly, do most landlords letting to this market usually buy a property which is already being let to students? Or do they buy a house and make necessary alterations?
Secondly, do I need to a buy-to-let mortgage or another type of specialist loan. I am looking at a three-bed house therefore hoping to rent to three or four students.
Answer
We see a mixture of both, but it’s worth noting that some local authorities have now stopped offering new HMO licenses, so in this instance, you would have to purchase an existing HMO.
On the other hand, others are still issuing new licences, so it would be worth you speaking to your local authority about this before you start looking at properties to get an idea of your options.
If you are going to let to three or four students on separate tenancies, then you would need an HMO mortgage.
However, if they are going to be on a single AST, there are some lenders who will fund this on standard buy-to-let products – a mortgage broker will be able to guide you through this.
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Question
Remortgaging: What should I do?
I’m running a buy-to-let property which I rent out to a local family. I’m due to remortgage in March 2023 and am becoming really worried about how my repayments will be affected. I currently have an interest-only mortgage with a fixed rate for two years.
Bearing in mind interest rates look to be going up, should I remortgage when the deal ends in March? Or would there be any benefit in staying put until things start to calm down?
Answer
It is so hard to say at the moment, and I worry about advising people on what to do, especially when things are just so volatile at the moment.
What I can tell you is that the money markets have calmed down since the mini-budget catastrophe, and the cost of funds has eased by almost 1%. So, the indication is that rates should ease off in the coming weeks.
However, if we have learnt nothing else, it’s that things can turn on a dime, and there is no guarantee that the money markets won’t get spooked again and rates will move back up.
In times like these when the market is so uncertain, speaking to an expert mortgage broker to discuss all the available options to you really is your best bet. I wish you the best of luck!
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