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3rd Mortgage

my husband and I currently have two properties, one which we rent out and the other we live in. We have applied to a bank for a mortgage in principle if we were to sell our lived in property and continue to rent the other. The bank have agreed this.
But when we asked about the possibility of renting out both properties we were told this is not achievable incase we get into difficulty with tenants moving out.

our mortgages add up to £156k and we earn £48k. My relative is on one mortgage with me, and my husband has his own. My parents (with an income of £66k) are willing to go on the new mortgage application in order to let us have all 3 properties (they have a small mortgage of £38k due to finish in 4 years with an endowment policy). But, the bank still say this is not likely to change things. Can anybody tell me why?

Comments

  • Thrugelmir
    Thrugelmir Posts: 89,546 Forumite
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    Kelliee83 wrote: »
    my husband and I currently have two properties, one which we rent out and the other we live in. We have applied to a bank for a mortgage in principle if we were to sell our lived in property and continue to rent the other. The bank have agreed this.
    But when we asked about the possibility of renting out both properties we were told this is not achievable incase we get into difficulty with tenants moving out.

    our mortgages add up to £156k and we earn £48k. My relative is on one mortgage with me, and my husband has his own. My parents (with an income of £66k) are willing to go on the new mortgage application in order to let us have all 3 properties (they have a small mortgage of £38k due to finish in 4 years with an endowment policy). But, the bank still say this is not likely to change things. Can anybody tell me why?

    You haven't said who your lender is. In broad term though there is a sea change in lending policy from the lenders. They have no need to lend if they regard the risk to be too high. You owe around 4 times your combined salaries which is pretty high. If you had no tenants for a while you could be stretched financially.

    Without knowing more information its difficult to make comment. IE deposit, LTV, interest only or repayment mortgage, existing equity etc.

    Is your existing rental property on interest only?

    The fact that you have different individuals on the mortgages for seperate properties would raise questions. As obviously there was some thinking behind this.
  • Thank You Thrugelmir.

    I never looked at it that way, when we went to Yorkshire Bank they offset my mortgage because the rental income covered it, so I didn't understand why they couldn't do a similar thing with my husbands property if we rented it.

    I can appreciate there is a risk involved due to tenants moving out etc thats why we considered getting my parents involved so the financial backing was there should we need it. We do have savings that would have covered both properties being empty for at least 5 months.

    We would be putting down a 10% deposit on the new property (£14K) and although there is no equity in my property as I bought at the peak (it is not negative yet) there is at least £17k in my husbands.

    Both mortgages are currently repayment and we would hope to do the same for the third also.
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