Viewing 18 posts - 1 through 18 (of 18 total)
  • Mortgage question
  • ant77
    Free Member

    Have a question about mortgages.
    I have a house. My girlfriend has a flat.
    She has moved in with me, and so we rent out the flat.
    We have now got married.
    We each have our respective mortgages in our own names, no joint ones yet.

    What is the status on remortgaging? With the new testing on ability to pay, where they delve into how many coffees you have a week etc, are we now both jointly liable for each others properties?

    What about if we were to get a joint mortgage, sell my place and upsize, but keep on the flat. If the flat is on a buy to let mortgage then would this be a problem?

    Just musing at the moment. Joint mortgage and upsizing is realistically never going to happen with prices round here… :o(

    dooosuk
    Free Member

    The flat should be on a BTL mortgage already!

    What about if we were to get a joint mortgage, sell my place and upsize, but keep on the flat. If the flat is on a buy to let mortgage then would this be a problem?

    When applying for a new mortgage, you’ll be made to switch hers to a BTL. If the LTV % is acceptable they’ll let you do it and have a new joint mortgage on yours/new place. If it isn’t, they’ll likely reject your joint mortgage and/or re-mortgage when the time comes I’d of thought due to your exposure.

    brooess
    Free Member

    The irony of people owning more houses than they need, creating a shortage of supply then saying they can’t afford to upsize because prices are too high! You’re not the only person thinking this – I have friends thinking about buying a house for their 3-year old ready for when he’s an adult on the basis prices will be too high for him to afford… 😯

    Personally I’d sell the flat to someone who needs it for their own security and financial stability/raising a family and put the cash into some kind of investment for your retirement. Getting into BTL now is for fools – BoE and government both have it in their sights as a risk to financial stability… Gideon also has his eyes on it from a tax and electoral advantage point of view

    BTL a threat to financial stability – BoE

    The Economist also recommending a crash would be a good thing given the broader disadvantages to economic growth… Gideon stoked the recent boom to get the Tories the election but now realises the desperately needed economic growth is being strangled by high housing costs… if you paid attention to the last Budget you’d have seen several policies designed to cool the market (if not get prices falling esp in London and SE)

    Economist

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    FuzzyWuzzy
    Full Member

    Would you have to remortgage just to add someone else’s name to the mortgage? No clue myself but it sounds overkill to me. Isn’t it more who’s name the deeds are in that important to?

    the-muffin-man
    Full Member

    Isn’t it more who’s name the deeds are in that important to?

    The mortgage company would probably hold the deeds/have rights to them though, so you can’t change them without their say so.

    ant77
    Free Member

    “Personally I’d sell the flat to someone who needs it for their own security and financial stability/raising a family and put the cash into some kind of investment for your retirement.”

    We’re actually letting it to a friend who is saving for a deposit to buy said flat. He’s a fair way off this at the moment, hence the remortgage question.

    I read through the budget and know that btl is being strangled a little. I do see it as a good thing and if prices do stagnate (can’t see them falling too far in central Guildford) then at least x amount of the mortgage is being paid off per month. Quite hard to get that kind of return on an investment portfolio considering the current amount we have in equity. If it does become inefficient to keep then we’ll sell it, unfortunately not to our friend if it’s before his time…

    johndoh
    Free Member

    “Personally I’d sell the flat to someone who needs it for their own security and financial stability/raising a family and put the cash into some kind of investment for your retirement.”

    I don’t see the point of that argument – everyone should be free to invest how they wish.

    (No, I don’t have a second property myself).

    mcj78
    Free Member

    Dooosuk – When applying for a new mortgage, you’ll be made to switch hers to a BTL

    really? i’ve recently got married & bought a house with the other half just before that – when I asked the mortgage advisor specifically if I had to switch my old flat to a BTL due to the new mortgage he said quite categorically “no” It all relates to your (now joint) ability to pay both mortgages disregarding any potential rental income… don’t know how it works if you add another person onto a mortgage but as you’re now married does it matter too much? Only reason i’ve kept my flat is that a mate is currently renting it – that and the fact i’d probably be lucky to break even if I sold despite paying the bastarding thing for 10 years… 😐

    brooess
    Free Member

    OP – fair enough. You’re one of the view who seem to get the bigger picture when they rent instead of selling their properties.

    I don’t see the point of that argument – everyone should be free to invest how they wish.

    A house isn’t an investment – it’s a home. That attitude that we see houses as a way of making ourselves richer is exactly the problem we have. It’s also illusory wealth – it’s not money that can be spent in the real economy.

    And I would argue that we shouldn’t be free to invest as we wish if there’s a broader negative impact on wider society e.g. investing in arms manufacturers/oil etc is generally seen as undesirable by those wanting an ethical investment.

    As for backing up my argument that failing to sell a property causes broader issues – read the Economist link – key points here:

    The booming market weighs heavily on the rest of the economy. People priced out of the capital take jobs in less productive places or waste time on marathon commutes. Young Britons have piled on mortgage debt—those born in 1981 have one-half more of it than those born in 1961 did at the same age—making them vulnerable to rises in interest rates, which are coming. Some will retire before they pay it off.

    As house prices have gone through the roof here in London I’ve had to save a whole lot more to be able to afford to buy so for five years I’ve reigned in my spending – money which could have been spent in the real economy. Equally it looks increasingly likely I’ll be renting in retirement which means I have to save even more for my pension so I can pay rent as well as day to day living costs – meaning for the next 25 years I’ll be saving every last penny instead of spending.

    So if we want deflation and secular stagnation/falling living standards then keep pumping up house prices. If we want real economic growth and wealth and don’t want to lose the best of our youth as they emigrate to countries they can afford to live in then letting prices fall over the next 10 years would be a sensible policy…

    johndoh
    Free Member

    A house isn’t an investment – it’s a home.

    No it isn’t. A house is a house is a house. It is home to the people that live there, that is all.

    dooosuk
    Free Member

    Dooosuk – When applying for a new mortgage, you’ll be made to switch hers to a BTL

    really?[/quote]

    We were when I sold my flat, we moved out of my wife’s flat and got a joint mortgage on our new home.

    But we dealt with the mortgage company where she already had a mortgage.

    Do the mortgage company actually know you’re renting it out and you aren’t living there? I’m guessing as you’ve a mate in their you’re not paying tax on the income either?

    ant77
    Free Member

    “I’m guessing as you’ve a mate in their you’re not paying tax on the income either? “

    We pay tax on it. Both our careers are in tax in some way, so silly (and unethical) not to.

    So I guess it just comes down to speak to an adviser as everybody will have a different situation.

    midlifecrashes
    Full Member

    Yep, practically all mortgages have a specific clause saying it is for owner occupation only, and that you have to request lender’s permission to let it. It’s not often they would refuse if asked, but is very normal for them to immediately ask an extra 1% on the current rate, and only remortgage on the basis of BTL.

    The government tax changes affect how BTL mortgage interest can be treated as a business expense and hence set against tax, in the same way an engineering firm could with a loan to buy new plant or machinery. It therefore affects possible profit margins overall. That’s not my experience of BTL though. Most people I know who do it, are essentially using it as a pension fund. You put in several thousands or tens of thousands to get it going, happy to see rents cover costs of mortgage and contingencies through the payback phase of a repayment mortgage scheduled to finish before retirement age, then have a wholly owned asset generating income at a much better rate than annuities. It’s not as tax efficient, but that’s not the issue to a generation who have been hit by miss selling of pensions, endowments, etc.

    mcj78
    Free Member

    dooosuk

    But we dealt with the mortgage company where she already had a mortgage.

    Do the mortgage company actually know you’re renting it out and you aren’t living there? I’m guessing as you’ve a mate in their you’re not paying tax on the income either?

    Ok – knowing nothing about your personal circumstances, nor the internal regulations within the company you have your mortgages with – could be that they only supply 1 residential mortgage per customer as a rule to minimize risk, I don’t know? I questioned that initially as the independent mortgage advisor I use told me/we to obtain an agreement to let from the mortgage provider & carry on as normal with the standard repayment mortgage as the best option unless were were planning or building some multi-million pound property portfolio 😆 Everything’s all legal & above board you’ll be surprised to hear – gas safety checks / multi-room CO monitors / hard wired interlinked smoke detectors / fire blanket etc. etc. etc.

    Not that I need to justify it, but I don’t make money on it, probably the opposite I were to sit down & count it all up – primary reason I haven’t sold it is because I don’t want to turf out my mate as he would have a hard time getting anywhere else given his circumstances & it saves me time & hassle I can’t be bothered with in selling the place right now… probably quite a few people are in the same boat right now (like the OP) – the reluctant landlord – i’m fortunate that I didn’t have to alter my commitments too much when getting the new place (that was down to the other half rather than me) but i’d have probably jettisoned my flat & take the hit rather than switch to a BTL mortgage.

    j

    mudshark
    Free Member

    IMO the problem with BTL is that many have mortgages so they’re borrowing to invest so adds risk but increases massively the upside potential. Thing is people can get wiped out in a downturn – such as happened a few years ago.

    BTL is the way for the better off to make money out of the less well off as reduces supply of affordable houses. Needs Government to sort out really.

    dooosuk
    Free Member

    Edit..as misread.

    So you spoke direct to your mortgage company and they told you it’s fine to let? Lucky for you I guess.

    As midlifecrashes says, practically every mortgage has an owner occupier clause in it.

    brooess
    Free Member

    Needs Government to sort out really.

    Labour created the initial boom in the 90’s to con people into feeling rich. Tories stoked the most recent boom to win the election by giving us the illusion we’re rich even though wages have stagnated, and to keep the banks from going bust which could well lead to a systemic bust.

    Problem is, like 2008 (which originated in bad lending in property don’t forget) it’s not always so easy to stop a bust once the banks and the borrowers are out of control…

    midlifecrashes
    Full Member

    Property booms have been happening since long before the 90s, check out the winter of 72/3.

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