Best Way to Fund 2nd Property Purchase

AlanMilly

I've just had a disappointing concersation with my mortgage lender about taking out a further advance to buy a 2nd property for medium term rental with a view to our children moving into in later years.

Our circumtances are as follows: Ages 43 & 45
Homeowners of detached house est value of £280K.
Current mortgage balance £55K (16 years left although massively overpaying currently to have it cleared in 3 years time).

Looking to buy 2 bed freehold semi for circa £100K.

My annual income £53K wife's is £12K

No debts, loans or credit cards etc.

It seems that our lender will only agree advance for home improvements for which we need to provide evidence of works carried out.
They will not allow us to continue the current deal (tracker at 0.65% above BOEBR) with a secondary lender taking a charge on our residential home.

Really miffed as we thought we would be a very low credit risk and the fact we're investing in bricks and mortar in the UK would be in our favour...obviously not.

Any advice on offer would be greatly received.

Doozergirl

The mortgage company is trying to get you to lose that tracker, that's all.

You will be able to completely remortgage with someone else, the question is whether you'd want to. I'd wait until your bargain interest rate mortgage is paid off, and then re-mortgage your house at the best rate available then and buy the BTL with cash.

Otherwise you're losing your fab rate.

You could find the deposit for the BTL via Stoozing and then take out a BTL mortgage but you won't get such a good rate as if it were against your own home on a new remortgage and you have to keep up the balance transfers for three years which will cost in transfer fees that you can't claim against the house. I'd wait until you can remortgage without losing your rate and put the interest repayments against tax on the BTL.