Help - 2 properties but no deposit

kaggi

My husband and I have just seen a house we like but until this we were not planning on moving. We have two properties already, one with a tiny mortgage (that is rented out) and one owned outright with an estimated combined equity of £250k (that is a conservative guess) - more than the house we have seen. However, we don't have savings - are there any mortgage deals that would let us use the equity from the properties we already have instead of a deposit and if so would there be a difference in the interest we would have to pay. As one proeprty is curretnly rented and the other should be easy to rent, then we would, if possible, like to rent the properties out so we don't lose out during the downturn in the property market. can anyone offer any advice or point us in the right direction?

koexelek

That should be quite easy.

You could raise two new buy to let mortgage on each house, using the funds raised to pay off the small mortgage you already have, and purchase the new property.

You can also offset the rent you receive on each house against the mortgage interest

unite79

So koexelek, lets get this right, kaggi is to re-mortgage 2 buy to lets, then she can use all this money to offset against the rent.

You may be a mortgage adviser, clearly you are no accountant or Inland revenue official - Shocking - Just goes to show the need to speak to a professional.

koexelek

unite79 wrote: »

So koexelek, lets get this right, kaggi is to re-mortgage 2 buy to lets, then she can use all this money to offset against the rent.

You may be a mortgage adviser, clearly you are no accountant or Inland revenue official - Shocking - Just goes to show the need to speak to a professional.

You are quite right

If you remortgage a main residence to purchase a buy to let, you can offset the rent on the buy to let against the interest on the mortgage.

This is the opposite way round, isn't it ?

I stand corrected

herbiesjp

What is the property value for property 1?
What is the rental income on property 1?
What mortgage do you have on property1?

What is the value of property2?
What is the potential rental income of property 2?

What is the value of the property you want to buy?

Wutang_2

unite79 wrote: »

So koexelek, lets get this right, kaggi is to re-mortgage 2 buy to lets, then she can use all this money to offset against the rent.

You may be a mortgage adviser, clearly you are no accountant or Inland revenue official - Shocking - Just goes to show the need to speak to a professional.

Unite79 - clearly not an accountant but rather a mortgage adviser - well spotted. and you're the one who's shocking - another insulting comment that could have been worded so much more politely. Buy yourself a punchbag.

getmore4less

unite79 wrote: »

So koexelek, lets get this right, kaggi is to re-mortgage 2 buy to lets, then she can use all this money to offset against the rent.

You may be a mortgage adviser, clearly you are no accountant or Inland revenue official - Shocking - Just goes to show the need to speak to a professional.

So how could it be done?

Telling people they are wrong but not backing it up with facts and possible options is not that helpfull.

AIUI you can offset the interest on debt up to the value of the property when first let if you can show the debt was to enable the let so it does not have to be on the same property but it does make it easier.

So the current house could have a mortgage raised on it up to current value(unlikely) and this would be allowable or could raise a mortgage on the new property for the current value of the to be let and still offset it.

Not sure on the rules for the existing let property where you want to extend the borrowing but if the rent covers a bigger loan this could be used to raise the deposit and the tax side can be considered independantly.

With some guidelines the OP can decide if it feasable and then spend the money seeking pro advice

unite79

Wutang wrote: »

Unite79 - clearly not an accountant but rather a mortgage adviser - well spotted. and you're the one who's shocking - another insulting comment that could have been worded so much more politely. Buy yourself a punchbag.

Your right Wutang, but it is frustrating that people come here asking for complex free advice, and get given the wrong answers.

If you read my post I have suggested they seek advice from a professional as the situation is not straight forward, getmore4less has grasped the situation well.

kaggi

The value on property 1 is about £110k (ish - haven't checked recently as only saw this house this morning) with a monthly income of £450 and the outstanding mortgage is £35. The value of property 2 is about £125k with a potentila income of £500 pm (again, this is conservative) and the other property we are going to look at is work around £160k. Does that help with your advice?

herbiesjp wrote: »

What is the property value for property 1?
What is the rental income on property 1?
What mortgage do you have on property1?

What is the value of property2?
What is the potential rental income of property 2?

What is the value of the property you want to buy?

unite79

Kaggi, I would go and see a mortgage adviser - What you need to do in principle is remortgage 1 or both of the Buy to lets, taking advantage of fee free products, ie legal and valuation fees - then this will enable you to place a deposit on the property you wish to buy - Let to Buy - Ie you have let the other 2 properties to purchase the new one - This will be at a lower interest rate - as would be a purely residential mortgage.
Your adviser should go onto explain void periods, and offer assistance about the tax situation - he should also be able to work on LTV's (Loan to value's) to protect your home.
Hope that provides you with the pointers you need,

herbiesjp

Based on the figures you have posted, you have got the potential there to change both properties to BTLs and raise a fair amount of equity from those properties.

You can then use that money to put as a deposit towards the new purchase.

You will not be able to re-mortgage enough from these properties to buy the new main residence outright, but by raising a big enough deposit, you will be able to have a low LTV on the new purchase and therefore get the lower rates available

It looks simple, but there are quite a few things that could trip yu up along the way, so your best bet is to speak to a whole of market adviser, either fee free nor not, whichever you prefer