2 mortgages

Joel498

I have one mortgage. But I can't sell the house. the mortgage is relatively small. I could easily afford to buy another house with a new mortgage and have the 10% deposit ready for it. I want to keep the current mortgage as it is a low rate and take out another mortgage which will inevitably have a higher interest rate. I have done the math and it is easily affordable to pay back monthly. Is it feasible to have 2 mortgages with different companies?

getmore4less

Not on the same house(at decent rates)

10% deposit is on the low side for the new house.

Current house value(obviously less than asking price)

current mortgage deal?

income?

proposed purchase value
10% deposit is that after fees?

what do you plan to do with two houses?

herbiesjp

In theory yes - you can have two mortgages with different providers on different properties.

You could even have a mortgage, and then a second charge on a property if you wanted.

However as getmore4less points out, your post raises more questions that need to be answered before someone can give you any pointers really.

nomoneytoday

It's possible, but rates will depends on your deposit and income etc

Joel498

Thanks for quick replies...Sorry for being vague
Current combined income 57000
Current house value 114000
Current mortgage 73000

Prospective house 145000
deposit 10%

herbiesjp

What are the plans for property1?

What are the plans for property2?

Are going to let one of them out?

If so which one and what rent are you likely to get for it?

Joel498

To live in property 2.
Renting out property one is a definate possibility. Current mortgage payment is £377 and rent is approx £650-700. Judging by replica houses being rented in the same street.

theduke2011

It's definitely possible that you can keep both mortgages on a residential basis. What the lender would want to know is that you can support both mortgages with your joint income - assuming that you have no other borrowing (loans,credit cards etc) then you could definitely look to support both mortgages on a joint income of £57000 (your total borrowing for both would be £203,500 from what i can see) This is 3.5x your income, so you could look to extend the borrowing further if you needed to.
Current scenarios would be:
1)£73,000mortgage/£114,000 value = 64% 'loan to value' - current house
2)£130,500mortgage/£145,000 value - 90% 'loan to value' - new house
the only problem with the scenario you have mentioned is that you'll probably have a good interest rate on your existing mortgage, but you may not get a great deal on the new one (could be 5.5%+ if you only put down 10%). Therefore, you could look at spreading the borrowing out by increasing the borrowing on your existing property (releasing equity) and using the funds to put down a bigger deposit on the new property. for example:
1)88,500mortgage/£114,000 value = 75% loan to value - current house - this means you would have an extra £15,500 for a deposit on the new one
2)£115,000 mortgage/£145,000 value = 79% loan to value - new house - putting down a bigger deposit from the funds you've raised on the existing one.
I find this is quite commonplace and means that you can enjoy attractive rates on both loans because you're spreading the equity out. Instead of the 5.5% on the new mortgage, you could easily be looking at less than 4%.
Hope this makes sense.

Regards,
D

Joel498

Great thanks for the post. Would my current lender have no qualms with me taking more out? Can they take issue with you if you want to take another mortgage with another company. It certainly sounds like an option. Thanks again to all who replied