First time buyer questions

playinwdykes

I was wondering if somebody can help. I couldnt see a similar post.

I am looking to buy a property with my partner. She already has a house, but is renting this out.

We have been advised to change her house mortgage to a buy-to-let mortgage and to use the deposit on that house (50%) as collateral for our new mortgage.

Would this be beneficial (i.e. would we get better rate / more money?) We are currently looking to buy around 220 000 with a 25% deposit.

Thanks in advance

CloudCuckooLand

You need to leave 25% equity in the existing house and be getting 125% of the mortgage in rent, to convert to BTL.

You should get a better rate on the new place with the bigger deposit this could fund, but the rate/fees for the BTL will be higher than as residential, so it comes down to the size of the two mortgages/rate & fee differentials, as to the exact benefit.

moonboy

I think the big question is, would borrowing money against your partners house justify the lower rate on your new propert. Some lenders insist you only have one residential mortgage, hence you may need to convert the other property into a buy to let. Long term renting is deemed a commercial venture, no longer residential.
Some lenders may allow you to have 2 residential mortgages run concurrently.
Will her lender offer a consent to let? For how long? This may negate the need for a b2l. Is it your intention to keep her original home long term?
Is it your idea to reduce monthly outlay? Perhaps consider switching mortgage one to interest only until you decide long-term.
Why not sell property 1 ?
More equity in property 2 would get you a lower interest rate, but would borrowing from property 1 justify it. Possibly not.
I considers B2L but decided not to, due to hassel etc!
Just thoughts, good luck.

VIGILANT22

Bringing what was a residence into the business (btl is business/investment)...you can release equity for deposit on new home and claim tax relief on both properties...

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