Help- I don't wannbe Mortgage Free!!!

unmissable

Please help me

About a year ago I went 'Mortgage Free', which was a great feeling and I managed to do it just before I got moved to SVR and payments went up. However, I am now feeling a bit flush and am considering investing in a holiday home whilst property prices are low. Not purely for investment, but partly because I want to use it myself.

What are the chances of me being able to start a new mortgage on my main residence (borrowing less than 60% of market value) and then using the money raised to go with a deposit to buy a holiday home which would mostly be let on a commercial basis.

Another, I hope small. factor is that I am in HM Forces and don't live in my main residence but let it out ( I rent military housing). This has never been a problem and never increased my mortgage rate because lenders usually recognise that those in HM Forces are forced to move around and they can still maintain a normal mortgage for their 'main residence ' even though they do not live in it.



To put some VERY approximate figures on it

Current house which is let out valued at £350K recieves income of over £1000 pcm and in 7 years of letting (364 weeks) has only been empty a total of 15 weeks. weeks.

Looking at borrowing £200K against this property.

New holiday property would cost £300K

I have £100K deposit to add to 'new' mortgage of £200K (plus a bit for stamp duty, fees etc)

Holiday home should generate NET (after managment fees) of £10,000 per annum.

Would a standard lender (First Direct, Abbey etc) be able to 'cope' with this slightly unusual request, or would I need an mortgage broker to find a specialist lender?

I am confident I could afford to cover any 'empty' months on both properties and at the end of the day I have a mortgage of £200k on a total property value of over £700K, with a steady income stream.

My salary would be good enough to get a £200K mortgage if it was a stand alone house purchase.

Thank you

jill2002

Abbey don't have a problem with you borrowing and it not being your main residence. As you are in the forces, they have a policy that makes this possible. The mortgage would be calculated on your income - not the rental income as would be standard with a rented property,. It would be placed on a residential mortgage and done as a remortgage on a property owned mortgage free. This is only because you are in the forces and it is intended to be your main property in the future.

unmissable

Jill

Thank you for the prompt response!

Would Abbey (or another) want to know or mind what the money raised was being used for? Does it matter that it is actually for another investment in property?

Pee

As long as they are happy to lend on the house in the UK, they will not be worried about what the money is being used for.

I would advise you to think very carefully about buying a property abroad at the moment. The exchange rate is not good. You need to do a lot of research. Sorry if I am telling you how to suck eggs, if you are in the forces you may be living where you want to buy already or have done so.

jill2002

Good advice Pee - I can't add any more.

unmissable

Thanks

Holiday property is in UK!