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Remortgage & New Purchase

Hi all,

Need some suggestions from you guys.

A relative of mine is currently looking at buying a property @ £279k, offer accepted. But he does not know how to get the mortgages sorted!!!

The current property he owns is valued at roughly £200k with about £15k left to pay. It is under his name as well as his parents & brother.

Does he release say £50k from this property and get a new mortgage for the new place under his name for £229k. Or does he remortgage the current property to a BTL mortgage for the full amount(85%) and put that down as a deposit on his new place and the remainder on a mortgage under his brothers name.

He earns £60k p.a. self employed and his brother earn £25k employed.

His current property would acheive a rent of say £1100 per month minimum.

Please can you experienced people on here give me your opinions to pass onto him;

1. What would be the best thing to do mortgage wise to save money?
2. What sort of rates would he be looking at for the new place?
3. What sort of rates would he be looking at for his current house if switched to a BTL mortgage?

Thank you for you help as always.
Debt at highest (November 2005) = £35,856

Debt currently (August 2006) = £20,790
&More £1,530, Egg £6,800, HSBC £3,760, Egg Loan £8,700

Interim goal = £23,400 (Target: February 2006, Missed but acheived May 2006)
2nd Interim Goal = £15,000, Target October 2006
Debt Free Date = February 2008 BUT I'M GOING TO BE TRYING FOR SOONER!!! :p

Comments

  • homer_j_3
    homer_j_3 Posts: 3,266 Forumite
    What is the plan for each property?

    If you intend to use one specifically for rental then a buy to let with the rental income asessing the affordability may be better. This is good for people who have 2 properties but you just need to beable to prove that you can receive in the rent roughly 15-25% more than the mortgage payment to get this.

    look on https://www.moneyfacts.co.uk and https://www.moneysupermarket.com at the best buy tables to give you a heads up on competetive rates. Just remember that the cheapest interest rate does not make it the cheapest product.

    If you get them to see a broker, they will take a lot of the hassle and will be able to give specific advice relating to their situation.

    Dont hesitate to ask any further questions..
    I am a Mortgage Adviser
    You should note that this site doesn't check my status as a Mortgage Adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice.
  • nmiah786
    nmiah786 Posts: 577 Forumite
    Thanks Homer

    I think there plan is to rent out the current property and live in the new property.

    If they get a BTL mortgage on their current property for the full amount £170k (85% of £200k) and clear their outstanding mortgate, they would have £155k to put down as a deposit on their new place.

    This would mean that they would need roughly £279k - £155k = £124k mortgage.

    Am I correct?

    Would they be able to get a good rate as the one with a high wage can not prove his income and the one who can prove his income has a lower salary for a £124k mortgage!!!

    They would be looking at a fixed rate mortgage with overpayments to be allowed. Obviously low rate and low arrangement fee would be better?

    Any suggestions?
    Debt at highest (November 2005) = £35,856

    Debt currently (August 2006) = £20,790
    &More £1,530, Egg £6,800, HSBC £3,760, Egg Loan £8,700

    Interim goal = £23,400 (Target: February 2006, Missed but acheived May 2006)
    2nd Interim Goal = £15,000, Target October 2006
    Debt Free Date = February 2008 BUT I'M GOING TO BE TRYING FOR SOONER!!! :p
  • nmiah786
    nmiah786 Posts: 577 Forumite
    Anyone else with any more suggestions?

    Much appreciated!!!
    Debt at highest (November 2005) = £35,856

    Debt currently (August 2006) = £20,790
    &More £1,530, Egg £6,800, HSBC £3,760, Egg Loan £8,700

    Interim goal = £23,400 (Target: February 2006, Missed but acheived May 2006)
    2nd Interim Goal = £15,000, Target October 2006
    Debt Free Date = February 2008 BUT I'M GOING TO BE TRYING FOR SOONER!!! :p
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