Convert Mortgage Into Buy-to-let
Posted on 26 January 2017 by Stewart Thompson
My partner and I are looking to move into a family home and want to keep our current home. I'm hoping the lender (Nothern Rock) will allow us to convert the existing mortgage into a buy to let. I suspect the existing mortage and rental income will cancel each other out at £350 per month. I have two questions - on the new mortage do I treat the shortfall in rent (£87) as a commitment on the mortgage calculation? And, could my existing property be let to a relative?
Depending on your individual circumstances, lenders will allow you let your existing property and move home. They do not have to issue consent and one of the factors that may prevent them from doing so is the monthly rental income you are expecting. They normally require the rental to be equal to 120% of your monthly payment i.e. £420. If consent is granted, they have no restrictions on who the property is to let to and would allow a family member to occupy it.
When considering a new mortgage application, Lenders would use the same criteria to ensure the existing mortgage debt is covered by the rental income. If it is not, they can use some discretion and take into account your earned income and look to see if it covers both mortgage debts.
I suggest that you speak to your local NRAM office and also seek independent mortgage advice to explore the options that may be available to you with other lenders.
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.