Paying cash for property and then taking out Buy to Let Mortage

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    Paying cash for property and then taking out Buy to Let Mortage

    Hi
    Estate agent has made it clear that the vendor will accept a cash offer, otherwise the risk is to get into a bidding war with 2 other people. I am looking to get the cash through loans from family and parents. If i am able to purchase the house, my aim would to be take a mortgage out on it as soon as possible so i can repay the loan.

    Will it be difficult to get a mortage (but to let) on a house that i own to repay the loans from friends?

    Is there anything i need to do from a tax or HMRC point of view regarding the loan and then the repayment? I am thinking if i need to explain how I funded purchase to hmrc onnce i submit S/A a few years down the line.

    #2
    You won't be able to mortgage the property (almost certainly) for six months.
    That's a policy most lenders use, so it's theoretically flexible, but I have no experience of that.

    You will need to be sure you will qualify for a BTL mortgage in 6 month's time.
    Most mortgage offers last three to six month's so it's worth applying now.

    Getting a BTL mortgage (if you and the property qualify) will take less time than the searches and other admin associated with the conveyancing, so there's nothing to stop you bidding as a cash buyer and changing your mind. Having no chain is normally a buyers best leverage, no one cares where the money comes from.

    HMRC won't need an explanation.
    When I post, I am expressing an opinion - feel free to disagree, I have been wrong before.
    Please don't act on my suggestions without checking with a grown-up (ideally some kind of expert).

    Comment


      #3
      There should not be a problem with deducting the BTL interest from the rental income.

      If you are paying interest to friends, that will be deductible also. But they might have to pay tax depending on their circumstances.

      Comment


        #4
        Subsequent to the other responses, I can confirm that a remortgage is normally available after 6 months ownership and registered with the Land Registry, however there are indeed a few who will accept such applications after three months: there are no issues so far as the lender is concerned in releasing monies for the repayment of monies borrowed to fund the acquisition and the associated costs .

        The lender will not accept a mortgage application until the minimum ownership eligibility has passed and as already mentioned the mortgage offer is normally valid for three months although there are a couple who have a six months validity period just like with residential homeowner loans.

        So far as processing times are concerned , the main stream lenders are now being far more efficient in their processing and it is now the norm for a properley packaged application to be converted to an approved loan within three weeks.

        Comment

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