Raising deposit for new place against let flat..?

awjs01

Hello,

Situation as follows...

I own two flats - one which I used to live in and now rent out, and my current home. My girfriend also owns her own flat.

We would like to buy a place of our own, but would ideally like to keep the flats to rent out.

I have £110K of equity in flat 1, and £130K in flat 2. My girfriend has about £15K of equity in her place.

We would like to borrow against one of my flats to raise a deposit of around £100K for our own place, with a new £250K joint mortgage (standard repayment of some description).

We're confident that we can afford to pay interest only mortgages on the rental properties, and to invest enough to cover the capital sum at the end of the mortgage period (still 10 years on flat 1 and 19 years on flat 2 and girlfriend's place). If we can't pay off all the capital in the end, we have the option to sell up. Given the timescales, the term left on the mortgages and even a worst case scenario for property prices, we really can't see negative equity being a problem.

However... a visit to Nationwide today suggests that 'regular' mortgage lenders are not going to be able to see beyond our total mortgage debt, to lend us money for our place together (Nationwide added up flat 1 mortgage, flat 2 mortgage, further advance on 1 or 2 for a deposit and concluded they could lend us £1.27 (joking, but not far off).

I understand where they're coming from, but can anyone suggest an appropriate lender/broker to approach - someone with more 'flexible' lending criteria..? I appreciate we might be into buy-to-let territory...

Thanks!

Al.

craigb_3

Hi. There is hope

I would work on affordability.

net income including all benefits etc, all projected rents from properties (verified by letter from letting companies).

deduct the following.

council tax on house wanting to live in
gas elec water
loan payments
credit card balances x 3% for OUR expected monthly payments
endowments
PRIVATE pensions
mortgage payments
insurance and assurance policies
private pensions

= net left

we work out what you want to borrow based on 6.09% over 25 years on repayment mortgage (regardless of what term and rate you want).

If this figure is more than 50% of (net left) then you cant borrow that amount.

dougk_2

I'm not an expert but have just been doing similar.

Remortgage both rented properties on a BTL mortgage (I use B&W as the rate was 5.19% fixed for 3 years) to get the deposit you need - their are certain criteria that have to be kept to (rent may have to cover 130% of mortgage etc)

Apply for mortgage using a bank that works on affordibility (Abbey in our case who simply said the rent covered the BTL mortgages by 130% so they ignored these).

In our case we were approved the joint mortgage therefore on the basis of our salaries (about 3.5 x joint income) which we are very comfortable with as its less than 1/3rd of our income on a repyment mortgage.

Nationwide proved to be very unhelpful and unflexible to me despite being a customer for many years and having a good record and savings with them as well.