Does owning one property help get another ??

rjay

I have a very simple question

I own my office, which is a small detached building that I paid cash for. It's now worth about £50k.

Is there any way I can use this asset to raise capital when buying a second property ? It is my understanding that any loans, etc., are deducted from the amount a lender would give me, so it seems that I cannot use this property to help increase the size of my deposit (other than just selling it !!).

benjimoron_2

As far as i know you could use it on a second mortgage, this would only help if you were very close to 100% on your loan-to-value.

For example if you wanted to buy a house for £100,000 but had no deposit then your loan to value would be 100%, very few places would give you a mortgage like that and even when they do you have to pay much higher charges because of the risk to the lender, eg if you didn't pay within the first year it would be tough for them to get their money back and they might not get it back at all.

Whereas if you could get a mortgage for £25,000 on the office it would be at 50% loan to value and the house would be at 75% loan to value. Both would get you good rates.

I'm no expert by the way so not sure how it works for same person having two mortgages in same name, maybe you could split it across two names (a parent taking one of the mortgages?) Might cost more having to have two mortgages anyway because you would have to pay both sets of fees.

Might be better off phoning mortgage company and explaining to them as they may use the office as their deposit (they'd want to put their name on the deeds tho, so they could claim it if you failed to pay)

Someone may have a better idea than me but I don't think it helps in any other way than working as a deposit.

rjay

Anyone else ?