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  • Property-a-holics

    All in with BTL? No residential mortgage?

    I'm trying to figure out the main arguments for and against putting a big chunk of equity into a residential. For some reason in my head a residential mortgage feels like a goal, I don't know why. I'd love to hear your thoughts on the matter.


    I have a BTL in London which I have thought about moving into. The current loan is £160k and the equity is £300k.


    As I see it I can either take a further advance of say £150k to buy another investment property or remortgage this to a residential on my current earnings (£160k resi mortgage).


    I like the idea of having my own place with a resi mortgage but I don't like the amount of equity I'd need to leave in to do it in London! I'd need to earn (and pay tax on) 50% more than I am now to borrow as much as a BTL can lend me now.


    Of course I'd be renting but I'd have move overall leverage increasing my worth each year.


    What am I missing here? Tax implications?
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    Hi grammar

    What are you actually trying to achieve right now? i.e. what is your current priority in the short term? ... and then medium term? ... and then for the long term? Is your short term goal to build a BTL portfolio, to live on the best residential, to rearrange your tax affairs, to pay down your debts, to maximise your leverage???

    All of these things are possible - planned in a strategic way - and so you would need to speak with a professional Broker who knows this market and my team at Property Tribes Financial Services are available to discuss the details and direction anytime.

    Hope that helps.
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    (11-06-2015 08:53 AM)Bridging Finance Wrote:  Hi grammar

    What are you actually trying to achieve right now? i.e. what is your current priority in the short term? ... and then medium term? ... and then for the long term? Is your short term goal to build a BTL portfolio, to live on the best residential, to rearrange your tax affairs, to pay down your debts, to maximise your leverage???

    All of these things are possible - planned in a strategic way - and so you would need to speak with a professional Broker who knows this market and my team at Property Tribes Financial Services are available to discuss the details and direction anytime.

    Hope that helps.


    The dream situation (I think) is a BTL portfolio giving me a steady income of say £40,000 and a nice residential.

    My current properties give me around £25k/yr.

    It's extremely unlikely my career income will ever get me where I want to be regarding the residential bit. I made an average of £35k the last couple of years (20k+50k) and what I'm aiming for is currently around £550,000. Unfortunately my income as a musician isn't stable so I may make less next year.


    I can see 2 routes;

    -Leverage up as high as possible with higher appreciating/lower yielding properties then use the capital gain to pay cash for the residential bit once I've built up enough equity.

    -The other option is to aggressively build my portfolio to raise my income to the level it needs to be to get a large resi mortgage.


    That said apart from the emotional benefits I don't know if it's financial smart having a lot of equity in a residential.

    (11-06-2015 09:37 PM)paul_barrett Wrote:  So I presume you are residing in any of your BTL properties

    I'm renting currently but a couple of my BTLs I could remortgage and move into right now. BM and TMW require you own property.
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    You are not allowed to reside in a BTL property you own as the sole occupant
    However there is nothing wrong in renting the property to a Mr Smith who never is around alot and you would be his lodger
    You give permission for your tenant to take on a lodger which in this case happens to be YOU!!
    However it does seem that the general understanding is that BTL lenders prefer the LL to have a residential property
    So perhaps it is worth taking the hit of leaving equity in a now residential property to future guarantee your ability to obtain BTL mortgages!?
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    (11-06-2015 04:38 PM)paul_barrett Wrote:  You are not allowed to reside in a BTL property you own as the sole occupant
    However there is nothing wrong in renting the property to a Mr Smith who never is around alot and you would be his lodger
    You give permission for your tenant to take on a lodger which in this case happens to be YOU!!
    However it does seem that the general understanding is that BTL lenders prefer the LL to have a residential property
    So perhaps it is worth taking the hit of leaving equity in a now residential property to future guarantee your ability to obtain BTL mortgages!?

    Hi mate, I've actually got 3 BTL properties and no residential. I think for now you just need to own property.
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    So I presume you are residing in any of your BTL properties
    If you are then you are as a sole occupier then you will be in breach of your BTL mortgage conditions
    That being the case I suggest you create a tenancy for a Mr Smith!
    If your lender finds out you are residing in one of your BTL properties the lender will repossess the property or call in the loan or require you to convert to a residential mortgage with all that entails!
    The received wisdom I have picked up from this site is that it is essential to have a residential mortgage
    You are on dodgy territory if you live in one of your properties
    Ask Lisa Orme who is a mortgage broker who provides very succinct opinion on this site regarding mortgage qualification
    You may have got away with it todate
    There is no guarantee you will continue to get away with it
    Your original suggestion about regularising a BTL to a residential mortgage is a good one
    It future proofs your circumstances should you wish to invest in another BTL property
    Don't know how you have got away with it so far!?
    I think you should speak to a broker who will probably state the same things I have
    Given as you have the present opportunity to convert a BTL to a residential mortgage it might be appropriate that take advantage of your situation
    Lenders are becoming really snotty these days and will find any pathetic excuse not to lend to you
    Especially some of these useless EU regs soon to hit the UK BTL mortgage market
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    I think the general opinion is to discuss your circumstances with a mortgage broker
    You will then have an overview of what might be the best way for you to go
    I would if in your position definitely seek the advice of a whole of market mortgage broker
    Even if it just to confirm that a course of action you may intend to take is the best one
    You would kick yourself severely if you discovered after the fact that you made the wrong judgement
    Play safe and have your circumstances checked out by a professional mortgage broker operation
    You have nothing to lose and possibly everything to gain!!!
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