If you are not a cash purchaser, you will need a commercial mortgage to purchase buy-to-let property to rent out. If you want a relative to move into the house and pay you rent, this will likely be forbidden under the terms and conditions of the mortgage agreement.
Despite this, there have been a small number of what are termed ‘family buy-to-let’ mortgages available, but most lenders have stopped offering them. There is now a move by lenders to cater for this situation with new specialist mortgages that allow you to purchase property for rent by your children, or your parents.
These family buy-to-let mortgages are not targeted at buy-to-let landlords who want to make money. They are designed as a means for family members to help their relatives. A commercial mortgage lender will want rents to cover 125% to 145% of the mortgage payments. A family buy-to-let mortgage usually stipulates that rents paid by relatives cannot be above the mortgage repayment levels.
Most commercial mortgages have conditions that restrict the property use. Another example is buy-to-let mortgages that do not allow short-term rentals using Airbnb and other agencies. There are specialist leaders who are open to providing mortgages that cater for some of the cases that standard commercial mortgages will not cover.
A mortgage broker can help borrowers who want to use property for purposes not covered by standard mortgage products, helping them find the best suited deal to their circumstance.