Raising money to purchase second home.

anneliza

Hi

We currently own our home outright. It is worth approx £240,000.

We have seen a property which we would like to move into in the future, maybe 5 - 10 years when we are less able to cope with our current property and garden.

We would like to mortgage our home to buy this second property, we would then let this second property out, until we wanted to live in it.

This second property is perfect and is rarely available, but would cost about £190,000

Any suggestions on the best way to do this??

anneliza

olias

Can you raise a mortgage for £190K with your current income level? If so, any high street lender will do this. Benefit is you will not need a BTL mortgage as the mortgage will be on your main home, so you should be able to get a better rate. You will of course have to declare the rental income from this second property and will also be liable for council tax on it during vacant periods etc etc.

Olias

luckyfool

If you are 100% confident that your property would value up at that then its possible to refinance to get the full amount, but unlikely to be at the best rates.

Might be better to remortgage at 70%, and get a £50k mortgage on a buy to let on the property you are buying. do the paperwork right and get an accountants advice and you can allocate the interest costs for both mortgages up to the purchase price allocated against any rental income received so you can minimise your tax bill.

Worth speaking to a mortgage broker to get a full assessment of your circumstances as your personal incomes will impact on how much you can borrow against your residence and might mean you need to borrow more on the "buy to let" basis.

anneliza

Hi

Thank you Luckyfool for that advice, just have to wait until everything opens on Monday now!

It does seem a good solution.

anneliza