Can anyone give advice??

durbanamanda

hi
my husband and i own 2 houses ( 1 we rent out and the family home)
we have been offered our dream home but with having no joy at selling either of our current properties we are looking to secure £290k worth of finance (either mortgage or loan?). Our traditional bank has more or less laughed at us, but we've done our sums and know we can make repayments (long term plan will be to sell current properties when market picks up again - we don't want to be property owners!). we have anywhere between £180k and £250k equity in our current 2 homes (very conservative figures)
is a traditional mortgage broker our best option, we naively thought that our high street bank who have know us and our finances for years would be best placed to asses our risk and offer us best deal.
don't think there will be any problems renting out the family home.
any advice, would be really appreciated - this house is our dream family home!
Amanda

dwsjarcmcd

Amanda,
The amount of equity in your current homes is not the issue. In reality you will need sufficient income to service all of the loans and no-one will take into account potential rental income from your proposed let of the family home, although they may include the rental income from the other property.

How much in total are you looking to borrow? What incomes do you have?
Any debt? Deposit on the new place etc, etc.

durbanamanda

we need to borrow £290k - house is valued at £405k
income for both of us is approx £70k
husband has debt re business loan (we are both self employed)
we have approx £30k in savings at moment

this is maybe a stupid question, but why is the amount of equity not taken into consideration?
would we better renting out family home now before looking for mortgage (this is very viable option as family close by)?

getmore4less

What is the gross yield on the rental(based on market price) and estimate for the other house.

If these are below 5% I would not even contemplate renting, If a realistic market price gives a gross yield closer to 10% then they may be sustainable as a rental. If not that high sell.

Drop the price of your house to a realistic selling price, remember this slump could be 10years and you will be a landlords for all that time with what could be tight cashflow, rental voids/interest rate rises could take you down.


How are you funding the £115k difference between borowings and price with only 30k savings?

Tiddler_2

Hi Amanda,

Do you currently have mortgages on the 2 properties you currently own? If so how much on each? What rent do you currently receive, and what do you expect you could get in rent on your current family home?

As getmore4less asks - where is the balance of monies coming from to complete the purchase and cover the costs of buying - remember stamp duty will be 3% on this property, so around £12,150!!

Is your income of £70K what you have declared to the tax man?

Trollfever

long term plan will be to sell current properties when market picks up again - we don't want to be property owners!

When will the market pick up again?

herbiesjp

getmore4less wrote: »

How are you funding the £115k difference between borowings and price with only 30k savings?

Exactly.

Are you hoping to increase the borrowing on the first two properties to raise the extra funds?

If so, these two mortgages would need to be Buy To Let mortgages (or get consent to increase the mortgage and let with current lender)

However the rental income you get on each of those two properties would need to be able to cover the mortgage payment - this amount varies according to which lenders you are looking at. So your own personal income would not come into account at this point as long as they pay for themselves

As long as these two BTL properties are self funding, they will be "ignored" by most other lenders who would look to agree the new purchase for you based on your SE income, as long as that is the verifiable income declared to HMRC

durbanamanda

Tiddler wrote: »

Hi Amanda,

Do you currently have mortgages on the 2 properties you currently own? If so how much on each? What rent do you currently receive, and what do you expect you could get in rent on your current family home?

As getmore4less asks - where is the balance of monies coming from to complete the purchase and cover the costs of buying - remember stamp duty will be 3% on this property, so around £12,150!!

Is your income of £70K what you have declared to the tax man?

hi
we have mortgages on both properties. 1 has a £70k mortgage and i get £550 a month rent for it (its a buy to let mortgage). the family home has £90k mortgage on it and we reckon rent could be £500 per month.

re balance to complete purchase - seller is forgoing the deposit as he needs to sell house urgently, so the savings we have is for things like stamp duty, etc

the £70k income is what is declared to the tax man

durbanamanda

Trollfever wrote: »

When will the market pick up again?

hi
thanks for this insight !

as a said "long term plan" - i'm hoping that in 10 years time max we will be out of a recession

durbanamanda

herbiesjp wrote: »

Exactly.

Are you hoping to increase the borrowing on the first two properties to raise the extra funds?

If so, these two mortgages would need to be Buy To Let mortgages (or get consent to increase the mortgage and let with current lender)

However the rental income you get on each of those two properties would need to be able to cover the mortgage payment - this amount varies according to which lenders you are looking at. So your own personal income would not come into account at this point as long as they pay for themselves

As long as these two BTL properties are self funding, they will be "ignored" by most other lenders who would look to agree the new purchase for you based on your SE income, as long as that is the verifiable income declared to HMRC

hi
the two properties are more or less self funding with current interest rates andthe mortgages that is with them

income is declared to HMRC

we had never thought of increasing borrowing on original mortgages - we thought it would be simpler to have separate mortgage for the new house
i think we have been naive thinking that we had a lot of equity, so that the risk for any mortgage lender would be minimal if we ever defaulted.
we've done more figures since yesterday as someone already talked about income and our current bank is not taking into consideration the "income" from rental of both properties.

thanks

amanda

herbiesjp

I think your best bet would be to talk to a whole of market adviser

This way they would be in the best position to explain the best route to achieve your goal, taking into account the 2 properties you have, the mortgages you would have on them, the rental income received, the fact you weant to sell at some point and the fact you want to buy a new main residence

As you can see, there is a lot to look at