2nd mortgage to buy house? 1st house negative equity

rover25

Wondering if I had a 20 % deposit for a new house, but had a current house in negative equity, would the bank approve a mortgage ?
Reason I would consider not putting that 20 % amt into current neg equity house is because I hate it (to put it simply ) and that amount would still not clear the negative equity. I can save that amount over the next 1-2 yrs.
I earn about 31,000 and my partner earns about 21,000 and both in secure jobs.

_Andy_

What are the plans for the existing property?

rover25

Rent it out. Although the rent would not cover the mortgage payments and I have heard that, that is pretty much a requirment.
Hypothetically, we could afford the mortgages on both. I have over £1,000 left of my wages after I pay my half of the mortgage on current property. 2nd house mortgage would be no more than £500 /£600.

_Andy_

I doubt your mortgage lender would consent to let if the payments dont cover the rent.

rover25

I know, I thought that too. Would there be any way round that like saying a family member would be taking over the house? If they won't it would prob end up sitting empty or else we would just rent it out anyway:rolleyes:

benjo

rover25 wrote: »

I know, I thought that too. Would there be any way round that like saying a family member would be taking over the house? If they won't it would prob end up sitting empty or else we would just rent it out anyway:rolleyes:

You could ask your lender for permission to let your current property - some lenders will agree to this for a small fee and leave you on your current mortgage, others will insist that you take a buy to let product.

Assuming your lender would agree to lend you 100% of the house value + ??% you are already in negative equity on a buy to let scheme, the interest rate will almost certainly be higher than you are currently paying so you need to factor that into your calculations on affordability.

I dont really know what you mean about a family member taking over, please clarify that, I dont know if it would make any difference since I dont know if you are suggesting, if you are suggesting renting, then it wont make any difference to a lender that your tenant is related to you, the same calculations will apply to affordability.

What you do seem to be suggesting is stretching the truth Re: relatives taking over. I reckon you would have to sign something, from memory there is a clause in your mortgage that very basically says 'if you lie to us it could be fraud, you could go to prison, face a fine and loose your house' - Im not a legal or financial professional, so dont take my word for that. But Im fairly certain your lender can withdrawn your product and repossess if you tell em fibs (and you would get spots on yer tongue).

Dont let your house sit empty if you can at all avoid it, empty houses attract bored teenagers! (At least they did where I used to live) and bored teenagers can seriously devalue your property.

Your last option of just renting it out anyway, Im sure there are tons of people who do that, taking the stance that what your lender doesnt know, wont hurt him - it is a gamble and only you know if you are truely happy to live with the consequences of the gamble you take.

Overpay your current mortgage, get yourself into an equitable position again and then your lender will be much more happy to discuss your plans and any interest rates will be more favourable, you wont have to stretch the truth with your lender so you wont put home at risk.

Goodluck with your plans.

Boozer

What would be the interest only payment on your mortgage on your current property??? i believe this times 1.2 should be less than the rent of the place and you may get a BTL on it.

I think it would be a good idea, negative equity sucks and you have to look at it on a long term now and get someone else to help you pay it all back with rental income.