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Thread: Mortgage Question - Residential to BTL?

  1. #1

    Mortgage Question - Residential to BTL?

    I will be looking to buy my first house (in the UK) in the next year or two but am not very knowledgeable in this space.

    My question is:

    What happens if I take out a residential mortgage but after (for example) 3 years, my circumstances change and I need to move abroad, are there methods/processes in existence to then allow me to rent out this property whilst I am living abroad?

  2. #2
    the lender may give "consent to let" for a limited period (possibly for a fee/higher rate) or they may not, at which point you would be looking for a BTL mortgage from the same or different lender

  3. #3
    Thanks for your response!

    If they do not provide consent to let - do you have any idea of the cost expectation for exiting the residential mortgage and picking up a BTL?

  4. #4
    Depends on whether there are redemption penalties on the residential mortgage and whether there are product fees for the BTL mortgage.

    Other than that, if you move from one lender to another you may need to pay for a valuation and legal fees (although some lenders offer these as an incentive on some mortgages). You may need to move lenders if you find that your residential lender doesn't offer BTLs, or the rates/criteria aren't competitive.

    Also, deposits tend to be higher on BTL than Residential.

  5. #5
    As above, generally you will need to hold 25% equity to convert to a formal BTL. There are fee free BTL products to keep costs down if you need to transfer, but cannot forecast what they will look like in 3 years time.

  6. #6
    Given the above, would you be able to provide me some advice for the following scenario:

    Currently feel like I am p*ssing away cash renting when it could be going towards the ownership of an asset (a property).

    I am based in London currently but probably looking to purchase on London outskirts.

    Realistically, it is likely I will only be based in the UK for c. 3 years before moving abroad for an unknown period of time.

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