What kind of mortgage am I looking for?

Miss_E_of_L

In short I want to let the property I am living in at the moment and buy a new home to live in. Do I have to remortgage my existing property and get a purchase mortgage for the new home?

Now the long story ... Two years ago I bought my first home. At the time my mortgage lender said that they would lend me £469,000 - how many rooms does a girl need? - but I only borrowed £202,500 (my well sized 1 bed flat cost 225K and I put down a 10% deposit).

Now I would like to move to anoher area and ideally would like to let this flat, I would also like to buy another flat to live in. The properties in the area I'm looking to move to are similarily priced and the deposit I can put down - without selling the current flat - is about 25% - 30%

So in my tiny pigeon brain the ideal set up would be that I would be able to get another purchase mortgage alongside the one I already have; is this even possible? I am still gainfully employed and my income has gone up (not considerably though), and if I don't manage to let my current flat I can afford mortgage payments on this and also on a new flat - remember I could be paying off a 469k mortgage right now, but I am paying less than half this!

If a buy to let is my only option, this would mean I would need to work on my deposit.

Any advice appreciated.

herbiesjp

You could ask your current provider for consent to let - they will then advise you if they will allow this and then any cost implications in terms of fees and rate changes.

You could then buy your new property, as a main residential property, and as long as the rental income you would expect to get on property1 covers the mortgage amount, the the lender for property 2 will "ignore" that mortgage commitment in the background

Miss_E_of_L

Thanks! I had no idea I have to ask my current lender for permission to let.
Set up seems quite clear cut. Thank you v much

herbiesjp

Miss_E_of_L wrote: »

.
Set up seems quite clear cut. Thank you v much

It can be if you know how

But it can be a little more tricky than the simplistic explanation above, in terms of meeting the criteria for the new lender

You may benefit from professional help to guide you through this - that is assuming your current lender will grant you consent to let, as there are no obligations on the lender to grant this

Mrs_Bumble

What deposit do you have for the new property?

herbiesjp

Mrs_Bumble wrote: »

What deposit do you have for the new property?

Posted above:

The properties in the area I'm looking to move to are similarily priced and the deposit I can put down - without selling the current flat - is about 25% - 30%

benjo

One word of caution, what your lender was prepared to lend two years ago against your salary might not be the same now since lending criteria are much stricter in terms of affordability criteria and salary multiples, worth checking this out.

Goodluck.

RufusA

Another word of caution (just when it was sounding so positive), a number of lenders are reluctant to give consent to let (except in exceptional circumstances). Particularly those lenders with a number of high risk debts their books (Northern Rock).

You may find, particularly with a flat, that some lenders require you to have a minimum of 75% LTV, AND be able to prove a rental income of at least 120% of the mortgage payments. Without this they won't give consent.

By the look of things you may be nudging negative equity in your current flat, which will make alarm bells ring in a number of lenders.

Would be worth talking to a mortgage specialist, as you may need to pay off some of your existing morgage with your proposed deposit! It may be a fine balancing act between the two properties to meet all the lending criteria and not get fleeced on interest rates!

Good luck - Rufus.