Mortgage advice please!!

matmad

OK, I'm getting confused! Still haven't got to grips with how this works...

In December this year we will have paid off the mortgage on our flat. We want to buy a bigger house to live in nearby, but keep the flat and let it.

Our flat is probably worth about £150k, and we're looking at buying a house for about £250k.

Does this mean that we can just get a residential mortgage for £100k and use the value of our flat as a deposit of £150 towards the £250k we need?

If so, does the mortgage lender then stump up the whole £250k to fund the new house?

Or am I bonkers..

Debt_Free_Chick

No, it's not quite as you say. You cannot use property A as a deposit for property B.

What you do is to take out a mortgage on property A (the flat) and use that as a deposit for property B e.g. remortgage the flat for £75k and use that cash as a deposit for the house. You would then need a mortgage of £175k for the house. In total, you would have a mortgage of £250k, but split across two properties.

herbiesjp

No.

If you want you can release some equity form the flat, which would have to be on a Buy To Let basis.

The maximum mortgage amount will be determined by the rental income that you could get on the flat

You would then use those funds as the deposit on the new property.

You will then need to get a residential mortgage for the difference between the purchase price and the deposit you have managed to raise.


I suggest you get the help of a professional, as basedon your above questions, you could end up going down the wrong route.

This way the adviser will help you look at the figures and see if want you want to achieve is a) possible and b) worthwhile in terms affordability for you and c) if you are bonkers

matmad

Thanks very much both!

And yes, I am going bonkers. I checked back over some old posts I made three years ago about the same thing, and had already asked the questions I needed the answers to!

Memory is shot to pieces - so much for the brain training!

Anyway, we should be able to afford it. Our income is about £51k and I don't earn enough to pay any tax from my self-employment. Does this mean we should put both mortgages in our joint names to maximise tax allowances?

We don't have any loans or debts apart from the usual hosehold bills.

Do you know if Martin has a list of recommended Independant Financial Advisers?