what if my resdential home now id bay to let??

[adlershelly]

Hello
Hope anyone can help me,
I brought a house base interest only mortgage almost two years ago with a regular mortgage and a flat with but to let mortgage, during this time me and my wife moved to the flat (it's a bigger house so we thought will be much better off with the rent will receive on the house ..).
At the past year we have let the house.
The thing is that I want to remortgage the house, not for borrowing more but just for a better rate and I may want to change lender.
1) Do I need to ring both the mortgage companies and let them know and my situation is changed (one should change the mortgage to buy to let and the other should change my statues to a residential mortgage)
2) Is it needed to be done anyway??
Because if I want to remortgage the house wouldn't the lender will ask me for proof of address for example?
Basely I’m looking For the best way solving that as my two years low rate has ending and I didn't realizes at the past how high will be the rate after!!!

Thanks a lot
This forum is excellent !!!!

[MrShed]

I am assuming when you say remortgage, you will probably be switching companies? In this case I wouldnt really worry about what your current company thinks the situation is, as long as you ensure the new company knows the situation when applying. Are you talking about remortgaging both properties or just one?

Needless to say, the best people to get an answer for this question from is your mortgage company :)

[adlershelly]

hi there..
want i mean is that i only wish tohow can i remortgage the house i'm letting now which i have a normal mortgage
the flat i'm in at the minut is the flat i have brought to let so i have a buy to let mortgage but that's is now my residental home..

can i ring my mortgage company of the flat and chage it to a normal mortgage - has i'm living there now? is people doning that? changing from a buy to let to a residental??
and then you think i should just let my next lender to the house to get a buy to let??

thankssss

[MrShed]

And as I've said the best way of checking is to contact your lender. My instinct would be that absolutely you should tell them about a change of use of the property, not so much for the flat, but certainly for the house. There will be some covenants on the mortgage that you may be breaking, for example you will probably have a set yield you must achieve on the rent on the flat, and you will not, technically, be achieving that currently. And you may, for example, not be allowed to rent out your house under the terms of your standard mortgage.

[Yingtan]

If you speak to your lender you may be able to get a consent to let on the house. You must tell them as you are almost certainly breaking rules with your current mortgage company for your house. Alternatively you should switch to a biy to let product.

In regards to the flat where you have a buy to let mortgage you may also want to consider changing lenders as usually residential mortgages are more competitve than buy to let, so you may be paying a higher interest rate on the flat then you need to.

Feel free to email me on ying@exquisite-properties.com if you need any further help.

[Tax Accountant]

Perhaps without realising, you have done yourself a great favour in saving a lot of Capital Gains Tax if and when you ever decide to sell either property. This is because both properties have been your 'ONLY OR MAIN RESIDENCE' at sometime in your ownership and also both properties have been let as resindential accommodation at some time in your ownership.

As a result you will have the following periods of ownership exemped from Capital Gains Tax if and when you sell the property. All gains over the whole period of ownership are time-apportioned and therefore it is never necessary to value the properties as use changes from residence to letting or vice versa.


Exempt period and reliefs are as follows:

(1) The actual period occupied as your main or only residence; Where the use is as a second home, it is possible to nominate this as a main home if this gives you more relief. Also overseas residences are capable of nomination as main residences if this is preferred. there are time limits for making and revoking nominations.

(2) Final 3 years of ownership regardless of the use during those final 3 years. Note that if any part of the final 3 years overlap with actual occupation as your residence, you cannot count this overlapping period under both headings (1) and (2).

(3) If you have used a property as a residential accommodation at anytime in your ownership and also let it as residential accommodation at anytime in your ownership, you will be allowed Lettings Relief of upto £40,000 for each joint owner. Therefore, a couple, married or otherwise, will potentially get a maximum relief of upto £80,000. There has been some recent re-thinking on how the amount of relief under this heading is calculated or restricted.

(4) All owners automatically get at least non-business asset Taper Relief. This is 5% after complete 3 years of ownership, increasing by 5% per annum for every complete year thereafter until it reaches a maximum of 40%. For those who have owned their properties since before 18 March 1998, the period of ownership until 5 April 1998 counts as one complete year. This is often known as a 'bonus year'.

I hope this has been useful to readers generally.

As always, it is best to obtain professional advice for your specific situations before making any decisions.

Ramnik