Q My girlfriend and I are thinking of buying our first property together (neither of us have bought or owned property before). But we are thinking of moving abroad in a few years’ time and keeping the property here and renting it out. We may from time to time move back here for a year, live in the property and then move back abroad and rent it out again.
We hear that we would need to change the mortgage to buy to let. Is that necessary? Is it easy to do? What are the implications of doing this? MT
A You won’t necessarily have to change your mortgage to a buy to let if your lender is prepared to offer you its consent to let. If it does, then you stick with the mortgage you have when you move abroad (or wherever) and are able to let your property to paying tenants.
However, consent to let is likely to be granted only for a limited period – for example, for 12 months (so reviewed each year) or the time you have remaining on a fixed-rate deal. Your lender could require that your mortgage represents no more than 75% of the value of your home. If it doesn’t, you are unlikely to get your lender’s consent to let and you are also unlikely to be able to swap to a buy-to-let mortgage.
Another possible barrier is if you use a scheme aimed at first-time buyers such as help to buy, to purchase your first home together. With many of these you are prohibited from letting out your property unless you can show that it was always your intention to make the property your home but that a change to your circumstances mean that you were forced to move out. For example, if your employer required you to work abroad, you might be given permission to let your home but if you simply chose to move abroad, your case would be less than convincing.
As far as switching to a buy-to-let mortgage goes (if that’s an option), yes it is easy to do. You can either accept the terms your lender offers you or get an independent mortgage adviser to find you a good deal. The problem is that once you’ve got a buy-to-let mortgage, the property must be let to tenants, so in the years that you intend to come back to the UK, you won’t be allowed to live in the property unless you switch back to a residential mortgage.
To keep life simple (and to avoid the costs involved in switching mortgages every few years), you would be well advised to keep your property as a buy to let and find somewhere to rent for yourselves when you are back in the UK.