Lots of equity in one house - can I borrow for another?

nollag2006

I currently have a property with a large amount of equity in it. My job will be moving to London shortly for 2 -3 years.

I was considering renting my existing home out, as the rent would more than cover the mortgage, and buying something small in London (up to about £350k) now that house prices are starting to rise again.

Problem is that I only have about £25k saved. Will a lender take the substantial equity in my existing house into account when assessing affordability?

Thanks all

N

V.Lucky

affordability is based upon your income and outgoings not your equity.

opinions4u

You could borrow against your existing property in order to fund a bigger deposit for the new property.

Ultimately it will be down the lender(s) being happy that you can afford all your commitments.

Whole of market broker may be worth using.

nollag2006

Thanks both for this. Very helpful.

The mortgage I have on my main home is a very competitive tracker, at BOE + 200 basis points, so I'm anxious not to refinance that.

Which whole of market broker would you recommend? I used to use L&C, but have found their service diminished in recent times.

minimike2

"I have on my main home is a very competitive tracker, at BOE + 200 basis points"

Competitive? Ok....


Sorry, I know that doesnt help but I just wanted to point out that you appear to have a fairly new (last 12 months) tracker, of which none are "competitive". Unless you are competing against the sub prime market!

lic

V.Lucky wrote: »

affordability is based upon your income and outgoings not your equity.

This is not strickly true in this case.
A mortgage is just a loan. If you fail to pay it they take back the security i.e. the house it is secured on, and them chase you for whatever residue is left.
In your case you have a large amount of equity in your house. Once rented out the rental is classed as income.
I suggest you contact your current lender and ask their advice on what to do.
If you rent your house, you must tell your lender, this will normally attract a higher rate of interest on the original loan, and your house insurance. However they may not allow you to rent it.
If your current lender cannot help, speak to a broker about 'let to buy' mortgages.