Advice - can you think of a solution? Help!

pennypitstop_2

Hi

I'm wondering if the wealth of knowledge around can help me come up with a solution...

Our house is valued at £105,000 and we have been approved for a buy-to-let mortgage on it, so we can keep it and take our existing mortgage onto the new property we wish to buy. The most we can take out is £9,500 from this house to use as a deposit on the next.

The house we want to buy will cost £145,00. We can port our existing mortgage (currently £75,000), and borrow the rest. We're tied in to the company on a fixed deal so can't really shop around for an alternative.

However, they've said that they can only led us 80% of the house price so we'll have to put in £29,000 cash.

We have the £9.5k and about £6k in savings... leaving £13.5k we don't have.

Is this just a case that we can't afford it and stay put? Or is there another option?

Thanks in advance for any help you can give

Penny

getmore4less

pennypitstop wrote: »

leaving £13.5k we don't have.

Is this just a case that we can't afford it and stay put? Or is there another option?

What can you afford?

That is the starting point then

Make sure the BTL is interest only and rent covers the interest and costs.
Add any surpluss or deduct any short fall.

Then your current mortgage and extra borrowing you can get on interest only
deduct that payment

See what is left per month to pay for the £13.5k shortfall and see if there is any way to borrow that amount for the money you have to service it.

Would it cover say getting that amount on credit cards.

A combination of 0% BT and a 0% purchase might allow the cash flow to make it work, but the follow on rates might not.

Not saying it is sensible but that is a different question to "can I afford it".


If the house is bigger can you increase income by say getting a lodger for a year to make up the difference.

If you sold the current place what would the shortfall be then, if the rental is marginal might not be worth keeping.

koexelek

Your only real option is if you can find a buy to let lender who will let you get more out of the current house.
It is possible to get up to 85% on a buy to let mortgage, but you must satisfy their rental calculation criteria

pennypitstop_2

Thanks for the replies...

The BTL mortgage is interest only and the rent=mortgage payment 100% (run through the business as either break even or at a loss for the tax breaks against business income!)

We could get a personal loan for the shortfall, but I'm reluctant to do that - we can afford it, but a bit of me thinks that it's taking too many debts on... same with credit cards. I could sqeeze about £7k onto my cards but that'd be maximum - also I'm very reluctant to get ourselves into that but I hadn't thought of the 0% option on a new card. Will look into that, thanks.

A lodger is not an option... we have two kids and the house we want to buy doesn't have room for anyone extra. Just a regular family home.

The reason for not selling our home now is that with the BTL mortgage agreed, I have tenants waiting to move in :eek: and there's no chain upwardly, it makes sense to go for the new place whilst keeping this one. Quick and easy process without anyone else involved. Current market being like it is, I'm not holding out hope for a quick sale. It has always been my intention to buy another property to let out, this is just doing it the other way around!

Will also have a look at other BTL deals for one which might let us pull more cash out.

Cheers for the help and ideas, folks. Any new brainwaves, please post here!

Penny

Dan_1976

Could you wait and stick it out until the price drops, theyare on the way down! May make is easier!?

hoggums

You can't afford it - don't get yourself into debt that you might not be able to service. It's simply not worth the risk to you and your family.

pennypitstop_2

Hi Hoggums... this is what I'm thinking, really, that I don't want extra debt (or extra numbers of debts to pay IYSWIM).

Although on paper we could afford to borrow the rest on a card or additional loan, it seems a bit scary to be doing so. The problem of borrowing on the mortgage is not what we can afford - on our salary combination, we could still borrow more for a more expensive house - but they will not budge on the 80% rule! So in theory we could spend £250k on a house, borrowing £200k if we had the rest to make up the difference.:eek: (Not seriously considering this route though!!!!)

Going to do some more sums... Do you think there's any way of telling the mortgage company we are paying more than we really are doing to get 80% of the ficticious amount, which would cover the price?!:o I'm trying to think laterally and 'outside the box'!!!:rolleyes:

Penny

FraudBuster

Do you think there's any way of telling the mortgage company we are paying more than we really are doing to get 80% of the ficticious amount, which would cover the price?!

Check out Mortgage Fraud.