property market??

iam2103

Hi there this is my first post, have been thinking this over for a while and need some advice and expertise. I currently live in a one bed flat in city centre area in Scotland. I purchased the flat on a 3 year fixed rate mortgage in April 2008, so next April I am due to remortgage. I was a first time buyer at the time and I got the mortgage with no deposit i just made the cut before deposits are required all the time now. I bought it for 100k. My girlfriend is going to move in about may june next year after i remortgage. What I was wondering and need help on is, is it possible that i can get a remortgage but with a loan included with the remortgage for say 20k. Then with this 20k can i then use this to get a joint mortgage with my girlfriend to purchase a buy to let property, as I am keen to get into the property market and development side of things? Or can I get a buy to let mortgage with some extra cash on my flat then purchase another place with girlfriend? Also another question incase things dont work out with the girlfriend where do I stand in having a legal agreement before she moves in so she cant take me for everything I have if the worse did happen? Do I need to say before she moves in that I have paid 3 years on my property so if we were to proceed with anything then I am entitled to so much extra back if things fall through? Thanks for any help.

iam2103

sorry forgot to say I dont know with current market climate that my flat is worth the same as when i bought it so dont know how that affects anything as never remortgaged before being first time buyer.

GMS

What is your property worth now and what do you owe on it?

Suspect you will be lucky to not be in negative equity with the prices having fallen.

To get a Buy to Let mortgage you would need 25% equity. If this allows a remortgage and a further 20k then it is possible subject to criteria but I doubt it will fit.

GMS

iam2103 wrote: »

sorry forgot to say I dont know with current market climate that my flat is worth the same as when i bought it so dont know how that affects anything as never remortgaged before being first time buyer.

No chance of a remortgage then.

Stick with what you have and try to pay down the balance as quick as possible.

iam2103

when mortgage is up I have paid around 23k on it in 3 years but i think this was all interest i was paying as i said no deposit when i purchased it. So when remortgage comes i think i still owe betwenn 90 to 95k possibly.

25% equity does this mean i need 25% deposit on getting another place?

This is where i wanted to get about 20k from a remortgage to let or just a joint remortgage so i could have deposit for another place!

Sorry if vague as i said new to this remortgage business.

My girlfriend and I joint income would be around 55-60k if that helps. Thanks.

iam2103

i wont get a remortgage on my flat?

beecher2

I think now is a really bad time to get into buy to let and you should maybe concentrate on paying down your existing debt before trying to take on more.

You are unlikely to be able to remortgage anywhere as I can't see you having any equity in your property - you would need to have a Loan to Value of 90% at the most. You're stuck with what your lender will offer you - dig out your mortgage documents to see what your follow on rate will be.

GMS

To convert your mortgage to a Buy to Let you would need to have 25% of equity in the property minimum. To buy another place you would need a minimum of 10% deposit for that as a residential.

You cannot borrow 20k on the flat if the equity is not there.

Yours and your girlfriends earnings are irrelevant if you require over 100% of the value of the property.

You could try to get 'consent to let' on the flat from your current lender but this is at their discretion and likely to be for 12 months only, after which time you would need to remortgage to a Buy to Let or sell. Either way if the equity is not there you could be in serious trouble.

If you think your earnings are sufficient to pay another mortgage why not put it to the test for a year and save as much as possible.

You are not in a position at present to raise finance on your flat. To do a Buy to Let mortgage you would be looking at a mortgage of 75k based on a 100k valuation, subject to all criteria being met.

iam2103

So I may have to stick with my currrent lender when my 3 years runs out? What if i want to add my girlfriend to mortgage would this reduce payments as 2 incomes? Or are we better off just having it in my name and saving her half of mortgage? thanks.

TrickyDicky

iam2103 wrote: »

So I may have to stick with my currrent lender when my 3 years runs out? What if i want to add my girlfriend to mortgage would this reduce payments as 2 incomes? Or are we better off just having it in my name and saving her half of mortgage? thanks.

it would never reduce the payments, but may increase the amount you can borrow (up to 90% of the property value). It would make you jointly liable though, so if one half refused to pay the other would have to pay the whole amount.

iam2103

currently flats are going for around the same price as i bought mine for in Aberdeen city centre so would this help with a remortgage i will have to look at my figures i have from lender and see what the outcome is!:(