A regulated buy-to-rent mortgage is a type of loan used when renting a property to an immediate family member. This type of mortgage is subject to stricter guidelines than a conventional purchase-to-rent mortgage, as it is considered a regulated activity known as a regulated mortgage contract (RMC). Purchase-to-rent mortgages are similar to residential mortgages in that they offer consumer protection to part-time homeowners. If you fail to inform your lender that you are renting out your home, you may face hefty penalties or even have your mortgage cancelled.
To be eligible for a purchase-to-rent mortgage, you must meet certain criteria such as having a certain income, other debts, and the ability to make a deposit and receive rental income. If you are moving to a new property but do not want to sell your old home, you can rent it out and transfer your residential mortgage to a buy-for-rent offer. Lenders must submit data on loans, performance, and complaints to the Financial Conduct Authority (FCA) through an independent information statement. To apply for a consumer purchase-to-rent mortgage, you must meet affordability criteria that take into account both your income and the rent you can expect to receive. A CBTL mortgage agreement is a purchase-to-rent mortgage agreement that the borrower does not enter into for commercial purposes.
Most BTL mortgages remain outside the jurisdiction of the FCA. If both you and your partner own a home and intend to move in together, you can apply for a purchase-for-rent mortgage to rent the other property. You will need to draw up a business plan to get a buy-to-rent commercial mortgage. If you inherit a house with an outstanding mortgage, you can remortgage it with a buy-to-rent offer in order to rent the property. It is not always clear when someone is carrying out a regulated activity, such as when offering a mortgage to a customer.
Therefore, it is important to understand the regulations surrounding regulated buy-to-rent mortgages.