Using My Existing Property as Deposit

qwerty_sss

I have an existing property worth approximately £160,000 of which I have a mortgage for 50% of this, this mortgage (for £80k) is split 50% repayment and 50% interest only.


I wish to buy another home with my new partner but would like to rent the existing property, which is in a prime location, and was wondering if I can use the £80,000 potential profit as a deposit on the new home?

talana

qwerty_sss wrote: »

I wish to buy another home with my new partner but would like to rent the existing property, which is in a prime location, and was wondering if I can use the £80,000 potential profit as a deposit on the new home?

How do you imagine that would work?
You won't be buying a new home with potential money. They'll be wanting actual, real money in their bank account.

Thrugelmir

You won't be able to remortgage your existing property to a 100% LTV.

Anything over 75% LTV would result in a high interest rate.

Will the rent cover the mortgage repayments?

Who is your existing lender? As lenders differ in their views to CTL.

antrobus

talana wrote: »

How do you imagine that would work?

Well I'd imagine it would work on the basis that the OP could remortgage their existing property for an amount in excess of their current mortgage, thereby generating some cash for a deposit on another property.

qwerty_sss wrote: »

I wish to buy another home with my new partner but would like to rent the existing property, which is in a prime location, and was wondering if I can use the £80,000 potential profit as a deposit on the new home?

Theoretically yes. But I doubt if you'll be able to get a 100% mortgage on your existing property, so don't count on raising £80k. £40k might be a more realistic target. What you should do is go and talk to one of these 'whole market brokers' who will be able to tell you whether or not there are any lenders about willing to do this kind of business these days, and whether or not you might qualify.

talana

antrobus wrote: »

Well I'd imagine it would work on the basis that the OP could remortgage their existing property for an amount in excess of their current mortgage, thereby generating some cash for a deposit on another property.

Well indeed, I was kind of joking. I suppose it was the way the question was asked that tickled me.

qwerty_sss

The morgage repayments are (round numbers) £350 pcm with a potential income of £800 pcm

The endowments expire in 2 years, and the morgage (with Bank of Ireland) is a fixed rate of which has 3 years left.

I was planning to bank (short term invest) the endowment money (£45k) for 1 year until the fixed term expires then remorgage only the remaining £45K