How to change your home sweet home loan to buy-to-let
You would be advised to take the mortgage out now on a residential basis then, when you plan to let the property, simply inform the lender that you wish to do so. The lender will then decide if they will give consent to let, subject to their own individual criteria. This could, but by all means will not always, lead to an increase in the rate of interest charged on the outstanding balance.
Ultimately, you could also remortgage the property on a buy-to-let basis, subject to a suitable Loan To Valuation ratio and rental income potential. it means that the homeowners each have a defined percentage stake in the property, determined by their individual contribution to the purchase price. In addition, in the event of the death of one of the parties, their share will pass according to the terms of their will.
The alternative is to hold the property as joint tenants (the usual husband/wife way). The implication of this is that, no matter what contribution each party makes to the purchase price, in the eyes of the law they each have an equal 50:50 share. Furthermore, if one party dies, his or her share will automatically pass to the other, outside the terms of their will. In general, the ownership register in the title deeds to the property must match the names on the mortgage application. The reason is that the lender has a vested interest in the property. Because the solicitor normally acts for the lender as well as the buyer, he will have to take into consideration the need to adequately secure the lender’s rights over the property, in case of default. One alternative is for you to take a second charge over the property. This would effectively make you a second lender, so you would have a legal claim to your percentage interest in the house when it is sold, but this would not affect the principal lender’s rights over the property in case of default. Most lenders will agree to the granting of a second charge, provided that it does not adversely affect their own position.
Because your interests are potentially in conflict with those of the lender, you would be advised to seek independent legal advice. Any conveyancing lawyer should be able to draw up a suitable document.
Given interest rates are low, you could ask your lender if they would advance you the additional amount that you need to purchase the remainder of the property.