Buy to Let For Relatives to Live In

Posted on 6 April 2016 by Gareth Guiver

I really need your help... My parents are now both in their 70's.  My father has around 6 months to live as he has cancer of the lungs. They have approximately £10k saved and will have a further £80k from the sale of the property they both live in.  I would like to get my mother in to a one bedroom flat £120k close to where I live so she can be more comfortable. I have around £20k that I can afford to help them/her out. Can I buy a property on a buy to let mortgage & let them/her rent it?  I am 38 and have a private pension pot of around £40k that I may also be able to use as a down payment.  The problem we have is if they use all their £80k plus any money I have to buy the property there will be no/little income to pay any bills... At least if the £80k is in the bank it can be used to pay the rent/mortgage & be available to pay any bills and living expenses. Many thanks in advance for any advise you maybe able to give.

There are lenders about who will consider a buy-to-let (BTL) mortgage where the tenant is a relative of the landlord. The market is slightly restricted due to the additional regulatory requirements this type of lending attracts and not all lenders have the resources to cope with it.

The size of the mortgage you will be able to get will largely depend on the monthly open market rental for the property you have in mind and I suggest you ask the selling agents what they think this is and then compare it to other properties in the area. The rental should cover around 125% of the proposed mortgage payments. You should expect to have to put down at least 20% of the purchase price as a deposit, but a bigger deposit of say 25 or 30% will give you a far greater choice of mortgages.

You can work out your buy to let rent with our calculator

I believe you would benefit from speaking to one of our independent mortgage advisers. Please call on 0344 346 3672 and one of our advisers will be able to look at your situation and advise you accordingly.

Answers provided in response to Ask the experts are based on the information provided and do not constitute advice under the Financial Services & Markets Act. They reflect the personal views of the authors and do not necessarily represent the views, positions, strategies or opinions of John Charcol. All comments are made in good faith, and John Charcol will not accept liability for them.

We recommend you seek professional advice with regard to any of these topics where appropriate.


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