2nd House Purchase

jude1976

Hi,

I'm looking for some information/advice.

I currently own a flat worth £85k with a mortgage of £54k on it. These flats can attract rental income of £500/Month.

I have seen a house that I wish to purchase, it is £137k, but I would like to keep the flat and rent it out.

I am single and have an annual income of £33k.

Is this possible? I'm not sure how the mortgages would work. Would i get one mortgage for £191k (£54k plus £137k) or do i just keep the current mortgage and get a seperate mortgage for the house purchase.

Sorry if I'm asking silly questions or have missed out any information.

Any advice would be greatly appreicated.

Thanks

herbiesjp

Yuo would need to get consent to let out your current property from your current lender

You would then need to get a new mortgage for the new property - do you have a deposit?

simonbh7

jude1976 wrote:

Hi,

I'm looking for some information/advice.

I currently own a flat worth £85k with a mortgage of £54k on it. These flats can attract rental income of £500/Month.

I have seen a house that I wish to purchase, it is £137k, but I would like to keep the flat and rent it out.

I am single and have an annual income of £33k.

Is this possible? I'm not sure how the mortgages would work. Would i get one mortgage for £191k (£54k plus £137k) or do i just keep the current mortgage and get a seperate mortgage for the house purchase.

Sorry if I'm asking silly questions or have missed out any information.

Any advice would be greatly appreicated.

Thanks

You could remortgage your existing propety on a let-to-buy mortgage. As the potential rental income should be greater than your mortgage payments the lender for you new property should take all of your earned income into account for the mortgage calculation on the new property.

I hope that his makes sense. It's how I financed my first rental property.

Ian_W

Not a silly question at all Jude and it looks very do-able. To build on what the guys above have said you have 2 choices re the finance on your existing flat.

If you have a deposit for your new property then you could keep your existing mortgage and ask your lender to give consent to let. They may charge you an admin fee or a slightly higher int rate but most will agree.

If you don't have a deposit you may need to go for a BTL mortgage and raise some extra money to act as deposit on your new place. Some will lend more but most will only lend 85% LTV on BTL, so you could borrow about £72K on the flat and you'd have about £15K deposit on your new place. The £500pm rental you anticipate will more than cover the BTL mortgage [at 5.5% Int only it's about £330pm] but don't forget you'll have other expenses and maybe vacant months to cover for the flat and S-D/legals for the purchase. With a £15K deposit you'd need to borrow just over 3.5x salary which shouldn't be too difficult especially if your credit history is good - so it's all very possible.

Going for 2 mortgages at once I'd suggest you use a whole of market fees free broker. Best of Luck.

rjm2k1

How much is your monthly mortgage payment? BTL (and consent to let) lenders look for something like 125%-130% mortgage cover from the rent.

jude1976

Thanks for your quick responses.

I very recently (on Tuesday) arranged to remortgage the flat on better fixed rate as i came out of a two year fixed deal on 31st Oct so i am therefore now on the standard varuable rate. I have called the mortgage company and they have said until i sign the paper work this remortgage won't go through so effectively i am sitting untied at the minute (although paying a higher rate!!).

I have made an appointment to see a whole of market broker on Monday to discuss my finance options. i'm really unsure how it would all work with the current mortgage and the equity in the flat etc...

I have a very very small deposit of £2k, was hoping somehow the equity in the flat would negate the need for a deposit.

I still very uncertain whether this is doable with my finances but i'm sure i'll have a clearer picture after monday.

Thanks again.