Buy to let remortgage with capital raise

[Gary G]

Hi all, has anyone used this mortgage product?

 

I jointly own a family home and have completed my build, need to raise £350k but can't take out a residential mortgage because of affordability (100% of joint mortgage goes on credit file!). I'm basically looking at options for me to keep the new build so have briefly looked at the criteria for BTL- affordability based on income multiples etc not factored and debt consolidation permitted. 

 

I'm beginning to think this could be a good idea, are there any drawbacks (other than having to return to family home and rent out the new build)? Could I move back in after say a 6month tenancy but leave the lending product in place? I can afford to service the debt from my income.

 

Keen to hear thoughts from those that have a better working knowledge of mortgage products/borrowing. 

Cheers

[K78]

I have a buy to let mortgage. As long as you are employed with a 10% deposit your income isn’t a factor as the “rent” will cover the mortgage. Not sure how this changes if you “capital raise” too. 

 

If you leave the buy to let mortgage in place it is technically fraud. As soon as you change your residential address the buy to let mortgage company would be in touch. 
 

Im guessing you may have to also pay the “developer tax” (can’t recall actual name) if you plan to let rather than reside in the house initially?

Edited January 28, 2020 by K78

[Temp]

3 hours ago, Gary G said:

I jointly own a family home and have completed my build, need to raise £350k

 

Sorry if I'm being dim but I don't quite understand your situation. Ok you have a joint mortgage on the family home but why do you need to borrow £350k if the new build is complete? Is it to pay off a self build mortgage on the new place or the joint mortgage on the family home or something else?

 

You might need to be a bit careful because if you let out a new build you can end up having to repay the VAT you reclaimed. Old article but still valid I believe..

 

https://www.glovers.co.uk/news-articles307.html

 

"Developers choosing to let their newly built properties are for VAT purposes making an exempt supply, under which VAT incurred in the construction cannot be recovered. This is because they are then operating as investors instead of developers. Consequently some of the VAT recovered when the developer intended to sell the property must be repaid."