buying second property

kacy75

Thinking of looking into buying a holiday flat. Can someone advise who much mortgage we would get for £2/300 pounds a month

Thanks

canny_yorkshireman_2

interest only bout 60K
hth

Neal_2

Erm...seems to me like you are looking at this backwards. I take it you have £2/300 disposable a month and so are looking to invest this in a second home. Thing is, your repayments will be dictated by the amount loaned, the term of the loan and the percentage rate. Canny yorkshireman has hit the ballpark figure - £60000 would be a 25 year mortgage at about 5.9% with monthly repayments of £295 for an Interest Only mortgage.

However, you need to see if you can get that kind of interest rate for a 'buy-to-let' mortgage. Also, some lenders will only give you 80% of the property's value in a 'buy-to-let' mortgage - so in the above case you would be purchasing a £75000 property with a mortgage for £60000. You would have to pay the £15000 up front (and then there is the solicitor's fees...ouch!)

https://www.whatsthecost.com has a mortgage calculator available on the site - this will work out your monthly payments when you put in the loan amount, interest rate and term of loan.

Hope this helps,

Ian_W

Neal,
I think you'll find that Holiday Lets don't qualify for BTL mortgages as a requirement of most BTL ones is that you have "assured shorthold tenancy" agreements, which a holiday let doesn't have. The more usual [and cheapest] course is to release equity from your main residence thoiugh there may be specialist lenders who will lend on the holiday property.
Of course not all holiday flats are for letting and second homes that aren't are even less likely to meet the criteria for BTL mortgages.
kacy, I also think you're going about it the wrong way. What's the price of props where you want to buy? How much cash can you afford to put in? Then what do you need to finance by borrowing? Would be my approach.

kacy75

Ian

Our house has about 70K equity in it and I know we can borrow up to about 70k more on our mortgage so thinking about a remortgage. We could afford up to £400 a month max, without skinting ourselves. Looking south east around 70K (dont get much for your money but its a holiday home so it doesnt need to be huge) and letting it out when were not using it. To make it worth our while we would need paying guests in it 8 weeks a year at the least.

Kacy

Ian_W

Hi kacy,
Wow, in the SE I wouldn't have thought you'd have got much more than a rabit hutch/garage for £70K, but you've obviously researched more than me. I'm looking in Cornwall ATM and I know that's the case there!!
£400 a month would service about £90K borrowing IO at 5%. Interest only on that part of the loan would be sensible IMO as you have the 2nd property to sell as a repayment vehicle at some point in the future. So your £70K remortgage is certainly affordable.
BoL with your search.

rozeepozee

You get really generous tax breaks with a holiday let if it's rented out for at least a certain number of weeks per year. It's worth looking into that perhaps?

Ian_W

Good point Rozee, I think the property has to be available for letting for 20 weeks per year and actually let for 10 for the Inland Revenue to consider it a furnshed holiday let. There are some benefits on Income Tax I believe but the main one is that it qualifies for business taper relief on Capital Gains. That means after 2 yrs of ownership only 25% of any gain is potentially taxable. Quite a big benefit really!!

BTW Rozee, you still in blighty or have you moved abroad?

rozeepozee

Still here, freezing my proverbials off (if I had them ) Busy studying for my counselling Diploma and trying to decide whether to stay and do a Masters or go to somewhere warmer. Warm is very tempting at the mo. Sheffield is arctic!

kacy75

looking for a rundown property, its cornwall that we have found a few, near st austell

Ian_W

kacy 75 wrote: looking for a rundown property, its cornwall that we have found a few, near st austell

We've also found quite a few rundown ones - trouble is the owners don't seem to realise it!!!

We're looking more around Looe, trouble is anything with character in reasonable condition that's sensibly priced goes within a few days/ couple of weeks. Plenty of modern stuff but the older stuff that's hanging around is cack, and over-priced cack at that.

You've probably a better chance around St Austell, as if anywhere in Cornwall could be called industrial, it around there and consequently prices are a bit lower but don't know how the letting would go there. Sell as being near Eden I suppose but personally I'm not too fond.

BoL with your search - back to RightMove for me now!!