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Do you have to have a buy to let mortgage to rent out?
Hi, Myself and my partner are living with his family and are very happy there we cant really afford to buy yet in our area for us to live in but I have saved enough for a 10% deposit on a flat.
All the mortgage sites I have looked at say you need 20% deposit for buy to let. My friend wanted to do the similar so she got a normal mortgage lived briefly in the property for 6 weeks and then went to the realestate agent and rented it out.
No body has ever said anything to her and that was a year ago. So I was wondering if we could do the same?
Aslo somebody said if you live in it for a certain period of time before you sell in the future you dont have to pay tax on the profit, does anyone know how long you have to occupy the property for and what rate of tax they charge you if you didnt?
Many Thanks Sally
All the mortgage sites I have looked at say you need 20% deposit for buy to let. My friend wanted to do the similar so she got a normal mortgage lived briefly in the property for 6 weeks and then went to the realestate agent and rented it out.
No body has ever said anything to her and that was a year ago. So I was wondering if we could do the same?
Aslo somebody said if you live in it for a certain period of time before you sell in the future you dont have to pay tax on the profit, does anyone know how long you have to occupy the property for and what rate of tax they charge you if you didnt?
Many Thanks Sally
Answers
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Firstly, you need to see a good mortgage broker, as there are hundreds of mortgage products on the market.
I have purchased Buy to Let properties off my own back and through one of these investment clubs. The one I found myself, I had to put down 15% deposit and the ones through the investment club, 5% deposit, but also had to pay them finders fees.
You can buy a property under the guise of purchasing it for yourself, but if you want to rent it out, you still need to inform your mortgage provider, they will usually charge you and administration fee of a few hundred pounds. You should also inform your insurers.
If a property is your main residence, then you do not have to pay Capital Gains Tax on the profits made from the sale. I imagine this would apply regardless of how long you remained at the property.
Capital gains Tax (CGT) is about 40%. You are allowed to make profits of about �9K tax free and any other fees incurred, through the sale, i.e legal fees, renovations etc are taken into account, but after all that, 40% should be paid on the remainder. Tax is less if you keep the property for 10 years, then the CGT is reduced.
I think, but I'm not sure, if you are buying the property in joint names, the Inland Revenue permit each individual to make �9K profit each, tax free.
I have purchased Buy to Let properties off my own back and through one of these investment clubs. The one I found myself, I had to put down 15% deposit and the ones through the investment club, 5% deposit, but also had to pay them finders fees.
You can buy a property under the guise of purchasing it for yourself, but if you want to rent it out, you still need to inform your mortgage provider, they will usually charge you and administration fee of a few hundred pounds. You should also inform your insurers.
If a property is your main residence, then you do not have to pay Capital Gains Tax on the profits made from the sale. I imagine this would apply regardless of how long you remained at the property.
Capital gains Tax (CGT) is about 40%. You are allowed to make profits of about �9K tax free and any other fees incurred, through the sale, i.e legal fees, renovations etc are taken into account, but after all that, 40% should be paid on the remainder. Tax is less if you keep the property for 10 years, then the CGT is reduced.
I think, but I'm not sure, if you are buying the property in joint names, the Inland Revenue permit each individual to make �9K profit each, tax free.
Hi thanks for your responses. I do live live in the Uk in shepherds bush London and was looking to but in east London as its cheaper.
Sorry to bother you but if I was to buy the property by saying that I was going to live in it so I could get away with only paying 10% deposit and then after a few weeks I informed the mortgage lender that for personal reasons I wish to rent the property out will they then turn around and say I have to pay another 10% off the mortgage as the deposit they require is 20% for buy to let properties or will they just leave it be?
Sorry to bother you but if I was to buy the property by saying that I was going to live in it so I could get away with only paying 10% deposit and then after a few weeks I informed the mortgage lender that for personal reasons I wish to rent the property out will they then turn around and say I have to pay another 10% off the mortgage as the deposit they require is 20% for buy to let properties or will they just leave it be?
If you do not abide by the terms and conditions of a mortgage they can opt to foreclose, which means you have to pay it in full in a very short space of time.
If you don't, they repossess.
The reason a buy to let mortgage costs more and needs a bigger deposit is because it is very much harder to repossess when there are tenants.
What you propose to do is fraud - obtain a pecuniary advantage by deception. A criminal offence.
If you don't, they repossess.
The reason a buy to let mortgage costs more and needs a bigger deposit is because it is very much harder to repossess when there are tenants.
What you propose to do is fraud - obtain a pecuniary advantage by deception. A criminal offence.
Hi thanks for your response after some more investigating of my own Velvetee is right and you can pay a small fee of a few hundred pounds and the bank will change it over. How long you have had to of lived in the property to do this I dont know.
Thanks, this is just annoying because me and my partner have lived in aus for the past 5 years and over there, there are no restrictions for buy to let mortgages no such mortgages exist and if you are buying a property to rent out it is so easy to get a mortgage and they want you to have as little deposit 5% because whatever the property costs you out of your own pockect goes of top of of you tax free threshold so you end up getting alot of tax back at the end of the year.
Thanks, this is just annoying because me and my partner have lived in aus for the past 5 years and over there, there are no restrictions for buy to let mortgages no such mortgages exist and if you are buying a property to rent out it is so easy to get a mortgage and they want you to have as little deposit 5% because whatever the property costs you out of your own pockect goes of top of of you tax free threshold so you end up getting alot of tax back at the end of the year.
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