Possibilities of using equity in 1st property to aid purchase of 2nd?

firefly2184

Hi All,

I'm after a little advice with regards the possibility of using the equity in my property to use as a deposit on a second property.

I own my property (worth £85k) with a LTV of 80%, and wish to purchase another property with my FTB partner. My property would then be rented out.

My partner has been advised by one broker (we are looking at others) that in order to purchase a property alone, he would be required to find a 25% deposit, which on the house we were looking at would be around £25k (house value £100k).

I was wondering if it would be feasible to release some equity from my property, increasing the LTV upto 95%, then adding that to savings to fund the deposit on the 2nd property?

Our joint salary is £45k and would be looking to borrow circa £180k in total, with the 1st property LTV 95% and the 2nd property LTV 75%, or even a combination of LTV rates.

Please could anyone provide some advice?

maninthestreet

You would have to re-mortgage the first property to release the funds, which may well impact your ability to fund the repayments for the mortgage on the new property. What is the realistic rental income for the property you currently own?

firefly2184

Hi,
The rental income from the 1st property would be 115% of the mortgage payments (based on an increased mortgage to 95% and on a repayment basis).
Thanks

Thrugelmir

Sell your existing property to fund the purchase. As you would be injecting the major part of the "deposit" into your new joint home. Ask your solicitor to draw up an agreement to reflect this in the eventuality that your relationship breaks down at a later date.

You don't have the capital to speculate on owning a 2nd property as an investment at the moment.

property.advert

130% of mortgage repayments on a LTV of 60% or 70% is what they are looking for. You may get 80% LTV on BTL but not 95%

herbiesjp

You will not get 95% borrowing on your current property.

You could get a mortgage for a higher LTV on the new property you are looking to buy - why are you being restricted to 75%? Sure you get the better rates at this level, but you are not restricted to 75% just because you are looking to buy a second property.

Definitely get second opinions on this scenario.