May 2023: What are the buy-to-let finance options for a couple nearing retirement? And can you switch from a residential mortgage to a buy-to-let for multiple tenants? Jeni Browne of Mortgages for Business has the answers…
Purchasing two buy-to-lets: What are our finance options?
Question
I was wondering if you could give us some advice regarding buy-to-let. I am a 61 years’ old and my husband is 64 and nearing retirement. We are just finishing a home renovation with house valued at £650k with small mortgage of £30k.
We would like to purchase two buy-to-lets initially and are looking at options. I will be working for probably another five years and my husband for two. Could we use equity release, HELOC etc.?
My salary is £30k part time and my husband’s is £92k.
Answer
This sounds really exciting – it’s great to hear you’re considering getting into property investment!
So, yes, you could certainly look to release capital from your home to form a deposit for these purchases – this is quite common and lenders are, on the whole, comfortable with this.
A good mortgage broker will be able to run through the options available to you, both in terms of funding the deposit but also the buy to let mortgages. Good luck!
Switching to a new structure – what is the cost?
Question
I’m planning to change my mortgage from residential to multiple tenants or separate tenancies or to a company. How much would it cost to change it and how much interest would I have to pay?
I have eight years left on my residential mortgage, and I have 140k left to pay. Please could advise on what options I have. Thank you.
Answer
I hope I am reading your note correctly, that you want to rent out the house in which you currently live to multiple tenants?
If this is the case, then your first port of call would be to speak to your existing mortgage lender to find out if they will give you consent to rent out your property.
If they are happy to go ahead, then they will put this in writing, and you are sorted – it’s that easy. However, if they do not agree, then you would need to do a full remortgage.
This is likely to leave you with an interest rate of circa 5%, however, I would encourage you to speak to a whole-of-market mortgage broker, who can run through all your options. If we can be of any help at all, please do get in touch.
Commercial property: Can I rent part of it to tenants?
Question
I want to purchase a commercial property that I have been using for several years. It would make a good buy-to-let upstairs with room downstairs for me to expand my business.
I do have someone interested who would rent the flat. But it could be all commercial?
The buy-to-let stamp duty in Scotland is very high so I would prefer the commercial route. Is it possible to have a split use?
How would the stamp duty be apportioned?
The value of the property is about £450,000. However, I can buy this for £350,000 as I am in the property with about 10 years to run and the seller would prefer to sell within the next year.
Answer
From a mortgage perspective, there are lenders who are more than happy to finance either a wholly commercial unit or a mixed-use property, so I’m confident this won’t cause you any issues.
I am unable to comment on stamp duty as this is a tax question, and so would need to be directed to a tax adviser. My understanding is that if the property is either part or wholly commercial, you would pay non-residential stamp duty rates, however, sometimes VAT may be applicable. Please seek professional tax advice before making any property investment decisions.
Selling my buy-to-lets: What to do about tax?
Question
I am 61 years old and have just retired. I have five buy-to-let properties in the UK in my home town. I’m single with no dependents. I am looking to sell two of my five buy-to-lets plus my own property (which I live in) in middle of 2026.
Meanwhile, I shall continue with the remaining three buy-to-lets as an additional income. I just purchased these three in 2022. My objective is to purchase my retirement home with the proceeds of the three properties I shall be selling in 2026. My question is this – what options are available to avoid paying too much tax with the sale of the two buy-to-let properties in 2026 please?
Answer
It sounds like a wonderful plan. I am afraid that we are mortgage brokers, not tax advisers and so it would be remiss of me to offer up thoughts on this matter. May I suggest that you speak to a tax adviser who specialises in property tax, and I am sure they will be able to assist. I wish you the best of luck.
Meet our expert…
Jeni Browne, sales director at Mortgages for Business
Jeni is a highly qualified mortgage adviser, specialising in property finance solutions for investors and landlords. She has nearly 20 years of industry experience and has a real knack for helping clients finance successful property portfolios.
She is particularly well-known for her effortless ability to explain complicated, jargon-filled concepts in plain English.
Jeni has worked for Mortgages for Business for the last 10 years and currently heads up the sales department. In addition to overseeing a large team of mortgage brokers, she is a landlord in her own right.
Jeni is the perfect person to answer your questions on buy-to-let mortgages and how to finance residential investment property.
Email kate.saines@emap.com to ask Jeni a question.
You can also listen to Jeni answering your questions in our latest podcast episode here
