Take out mortgage on my own house to buy another property?

TheGreatBear · 12 January 2009 at 12:09PM

socrates wrote: »

Quote: This is not true. You are well within your rights to release capital from your existing property, in order to purchase an investment property. As long as you can afford the repayments, via your income, and you are upfront with the lender about the purpose of the capital then they will have no problem.

Not sure where you got this information from Socrates!

Regards

So basically you are saying that someone approaches their lender on a mortgage free property asks them to release funds from it at residential mortgage rates and tells them they are releasing those funds for the purpose of buying another property i.e BTL - but not pay interest rates that apply to BTL mortgages.

In the current climate I do not think so.

Interested to know which lender will accept this. So perhaps you can update my obviously out of date information with the specific lenders in question.

70% of lenders will accept this form of lending - as an example though, Lloyds TSB Scotland. The reason why lenders impose higher rates on investment properties, is because they pose a higher risk to the lender, in that an applicant is more likely to default on an investment property as opposed to his main residence. So, even though the client will be raising funds to purchase an investment property the lender will still have a charge against the primary residence, and so reducing the risk to the lender.

There are some lenders who will not view it this way, but the majority will.

Regards

socrates · 12 January 2009 at 12:12PM

I will call Lloyds TSB now to confirm this as I require a similar mortgage for a similar purchase myself and the lenders I have spoken to so far will not entertain it

silvercar · 12 January 2009 at 12:47PM

rl290 wrote: »

If you were to get a mortgage on the actual BTL property, you would then be able to offset mortgage interest against tax. If, as you suggest, you were to take out the mortgage on your own home I believe that you could not do this... which is a big loss.

I, personally, would just wait for mortgages to become more available and at lower interest rates. This should loosely coincide with the bottom of the market (or, it would certainly be closer to the bottom than we are now).

R

The mortgage can be secured anywhere, it is still an expense of the rental business and there is no requirement that it is secured on the rental property. (In fact, there is no requirement that it is secured full stop.)

Many people (in the hey day of BTL) would raise the deposit for the BTL by increasing the mortgage on their residential home. This increase and the BTL mortgage would be allowable expenses as they were wholly and exclusively sought to fund the BTL.

TheGreatBear · 12 January 2009 at 1:02PM

socrates wrote: »

I will call Lloyds TSB now to confirm this as I require a similar mortgage for a similar purchase myself and the lenders I have spoken to so far will not entertain it

let us know how you get on - just a quick note: it was Lloyds TSB Scotland I spoke to, who are very different to lloyds TSB, with regard to criteria.

Regards:cool:

Take out mortgage on my own house to buy another property?

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