Anyone let out their property

[Snokio]

Hi guys,

Just wondering if anyone has let out their property for the purpose of a little return in investment? This is a new build property and with me moving in with my girlfriend (in which she may do the same or sell up and we buy another house together). If one or both properties were occupied, will this will impact on getting another mortgage?

Thanks

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[Grungewart]

Not me but parents did once upon a time when moving due to work. Back then the bank converted the original mortgage to a buy to let mortgage (shorter length and some different conditions) then quite happily gave them another normal mortgage for a residential purchase.

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[Penfold]

We have a small buy-to-let portfolio. More than happy to give you some advice for the 20 years I've been doing it. Particularly now as there's a whole swathe of new laws coming in which may have some bearing on it.

However, basically, you need to look at flipping your existing mortgage (if you have one) from personal to B-T-L which some lenders won't do. Then you'll need to work out the rental yield of the rent vs value (easy equation of Dividing the annual rental income by the property's capital value, and then multiply by 100. ) or just go to the link below. It'll need to be a minimum of 5% but ideally more. Commercial BTL mortgages are more expensive than personal.
http://www.thisismoney.co.uk/money/buytolet/article-3097699/How-work-rental-yield-buy-let-investment.html

Most lenders now require rent of 125% of mtg payment and a LTV loan to value of property of no more than 75%. So on a house worth, say, £100k they'll only lend £75K.

If you can work it then I'd say it's a no brainer in all honesty (with a few caveats).

Anyway happy to help if I can. I'm no Candy & Candy but have learnt a bit.

[Obsydian]

I'm also a part time landlord and can offer advice if wanted.

You can often get permission from your existing lender to rent out your property in order to avoid remortgaging.  I've done this, and they will require a reason, and simply saying that you have had a change in circumstances often suffices, but they will most likely put a time limit on the offer of between 6 and 12 months, so you will need to remortgage away at some point. You will require landlords insurance as your personal buildings insurance will be null and void if you ever need to claim.

If your lender won't agree to you renting out your property then you will need to remortgage to a BTL mortgage, and as Penfold has said, there are requirements that need to be met.  The most common is that the rent must be at least 125% of the mortgage payment, and a limit of roughly 75% of the market value (there are some lenders who will go to 85% again, but these are hard to obtain).  BTL mortgages usually attract largish fees, anything up to £7000, which can be added to the loan, and you will have to pay for a RICS valuation which, again, can be several hundred pound, depending on the value of the property.

I can recommend a good broker who can probably get you a better deal than any offered through the High Street but there will be a fee for that too!