BTL conversion to residential with no ERC

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    BTL conversion to residential with no ERC

    Hi, would it be possible for me to buy a house as first time buyer under buy to let, and then within a year move in and convert my mortgage to a residential one without having to pay early repayment charge (ERC)? I read somewhere that for first time buyers BTL does not come with an option not to exclude ERC. But could not find out more about this.

    #2
    There are so many lenders with so many B2L products you're probably best contacting B2L broker specialists., like NRLA tame ones... There's probably some options..

    Early repayment charge is ERC. EPC is something very different.

    Need to convert mortgage type to residential 1st, not after you move in, if terms anything like those I've ever seen.
    I am legally unqualified: If you need to rely on advice check it with a suitable authority - eg a solicitor specialising in landlord/tenant law...

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      #3
      Sorry I meant ERC, edited to include.

      So what your saying is that it is possible?

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        #4
        Ask as big broker. I dunno.

        And if there is such an offering, no idea if you'd qualify for it.
        I am legally unqualified: If you need to rely on advice check it with a suitable authority - eg a solicitor specialising in landlord/tenant law...

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          #5
          In buy to Let terms there are no schemes which do not come with without ERC’s. I would suggest that you firstly establish how much you might be able to borrow using your income given that any subsequent request for the loan to be converted to a residential mortgage would be based rather on a rental stress calculation for BtL. further as a residential mortgage the loan falls under the regulated loan criteria which will normally require the loan to be repaid on a Capital & Interest basis whereas BtL’s are normally on Interest Only.
          Putting aside no ERC’s which are standard for BtL’s , it is important that you investigate only those lenders who facilitate both types of borrowing since many of the niche BtL lenders do not.
          As and when you make an application to change the structure of the mortgage the lender will ask for the reason for wanting the change and if it is felt that you have tried to circumvent the normal criteria of eligibility for homeownership they would not only decline your request but place a marker on the mortgage to ensure that you haven’t simply moved into the property, were that to be discovered it is highly probable that you will be given three months to refinance.

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            #6
            Not sure if this will help you or not, but if you buy the house on a normal residential mortgage, you can often ask the lender to give you permission to let it out on that mortgage. Once you decide to move back in again, you just let them know again. I did this myself with Natwest. Think they charged around £100 for this.

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              #7
              loanarranger,

              Thanks for the reply, the reason why I want a BTL first is because I already have had an offer accepted on a house. My deposit was >50%. I already have a residential mortgage in principle. The problem is the tenant inside is not leaving. So I want to take over landlord ship and evict the tenant myself and then move in. Given the current circumstances it will take 9-12 months to evict the tenant so that’s why I think it’s best i get a BTL for the time being and then change to residential. Not sure if I can get a consent to let with a residential mortgage with sitting tenants.

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                #8
                You would not be able to complete on a residential mortgage whilst the tenant is in situ , If you were able to secure a Buy to Let mortgage , you would have to put in place an AST which would have to be for a minimum of 6 months, if the current tenant is proving to be a challenge then he/she/ they could scupper the transaction being completed by refusing to have a new Tenancy .

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                  #9
                  The tenant is currently on a periodic tenancy agreement, wouldn’t that transfer over to me if I take over?

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