New mortgage or re-mortgage, that is the question

Lillie_Munchkin

We paid off our mortgage approx. 2 years ago and would like to buy another property to fund our retirement. We are wondering whether it makes better financial sense to arrange a mortgage on the basis of our joint income, or, remortgage the house we own outright.

herbiesjp

WJether you raise the funds against your unencumbered property, or the new property, your income will have to be sufficent to justify the new mortgage amount.

However if you raise the funds off your current property, some lenders will treat it indeed as a re-mortgage and therefore you will have the benefit of the free legal fees and free valuation from soem lenders.

These two fees however will still need to be incurred on the new purchase.

Choice is yours really, as rates are similar whatever route you take. Are you considering BTL mortgages for the second property?

MortgageMamma

If you buy the second property as a cash buy it is often more attractive to a seller and you could therefore negotiate a lower purchase price. As for the mortgage itself like herbie said either way you go around it you will incur some form of fee's, whether built into the loan or upfront. I would advise that you speak to a whole of market mortgage advisor who can assess your financial circumstances and recommend the best route and mortgage deal for you.

HTH

MM

Lillie_Munchkin

Not sure about the Buy to Let mortgage, to be honest have just started looking around and while I'm waiting for Martin's tome of advice on mortgage to plop on my doormat I thought I'd ask you guys What would you say are the advantages of a BTL as opposed to an ordinary, repayment?

Thanks for your responses.

MortgageMamma

The only real advantage of buy to let in your situation is that it is assessed off the potential rental income form the property rather than your own personal income. You would need a 15% deposit. Another thing to bear in mind is that a buy to let mortgage is not regulated, by the financial services authority, which means you would not be afforded the same level of consumer protection as you would under a regulated contract, i.e. a residential mortgage. Whichever option you choose I would advise you seek professional advice, as there are a lot of responsiblities in becoming a landlord which a good advisor could tell you about, such as special buildings and contents cover, legal and rent guarantee cover, and home emergency cover. all these policies are designed to deal with eventualities that landlords commonly experience, such as rent defaults, eviction, and emergency property repairs.