Do I stand any chance?

jimdale

This is a little complicated but here goes!

I have taken early retirement and I'm 57 years old. I want to move to Spain and have my eye on a villa there that has been drastically reduced to around £270k. I own a second home worth £375k with no mortgage on it. I can rent it out and get around £1,300 per month in rent. Would I be able to release equity from the second home to purchase the villa and pay the loan with the rent?

I'm going to try and sell my current home which is worth about £350k and has a £77k mortgage on it but don't want to wait until it has sold as I will miss out on the villa. We also own 2 flats worth about £160k in total with no mortgage on them. They are rented out and I intend hanging on to them. We have another house worth about £150k that is rented out and has a mortgage of £130k on it. We also have a villa in Florida that is mortgage free which we want to sell but are waiting until prices rise again so we rent it out for a bout 30 weeks a year as a holiday home.

Any ideas on how to get the loan to purchase the villa? Are we regarded as a bad risk as we are retired. Have never been in debt and have a solid track record.

dimbo61

Why not rent for a year until your own home is sold ?
plenty of people in spain trying to sell up and move back to england !
If you rent for 6/12 months and see if you love spain before spending thousands on buying another property

GMS

Remortgage the second home and 1 or 2 of the flats on Buy to Let mortgages. The equity released could then be used to buy the villa.

May be able to do it on the second home alone but may fall short on rental income as would need to be 125% of the mortgage payment as a rule, with a rate often set as a 'stress test' by the lender.

Speak to a broker to see if it is possible.

holly_hobby

It is certainly possible - as GMS states the amount of capital reqd to pch the Spanish property with respect to rental calculators, may require you to remortgage more than 1 of your current UK portfolio.

Its also worth mentioning, that as a portfolio landlord the usual min income requirements of 25k may be ignored, (although from your post I suspect you may have an income a little higher than 25K !). Additionally under BTL, your age & max term shouldn't be an issue either.

The interest element charged under your BTL remortgages is a tax deductable allowance off your gross rental income (your accountant will advise). If you elect to effect the mortgages on interest only to maximise the tax benefits, you do need to consider a repayment vehicle or strategy.

As GMS states, speak to a whole of market broker, they will save you all the legwork in this matter, there are numerious BTL providers, including some well recognised high street names, your broker will not only source the most suitable lenders & products to your requirements, but support you througout the whole application process through to completion.

Do think carefully about Spain, if the property you are purchasing has already bottomed out then thats ok, but their property market is currently in free fall .. so do tread carefully and double check your exposure to further depreciation !!)

Hope this helps .....

Holly

geoffky

Rent in Spain as prices are falling and who knows at what level they will end at.. Unless you are out there having a feel for the market it must be hard sitting on the outside looking in.RENT

jimdale

Thanks for all your advice. It is certainly sounding as though it may be possible. I'll try and speak to a mortgage broker asap.

We are in Spain at the moment and are due to fly back to the UK in the morning. I hear what you are saying about the market here - it is not good! We have been coming over 3 or 4 times a year for the past 5 years monitoring the market and looking at the options. The villa we would like to purchase is a bargain and stands out against all the others available. It is on an exclusive urbanisation and has been built on a 4,500 sq meter plot with fantastic sea views. Most villas are on 500 to 1,000 plots so this one is very special and private. It was originally on at around £650k and has gradually come down to £325k and the agent thinks we should get it for £250k - £270k. We just can't see it going any lower so we feel comfortable about the price.

Just hope we can raise the capital.......

nathan1986

Sorry to be slightly off topic, I'm curious as to what a portfolio landlord is as opposed to just a landlord? Is it a landlord with multiple properties? OP good luck in securing finances for your villa. I love Spain!

Nathan

holly_hobby

A portfolio/professional landlord is someone who has several rental properties, and is effectively perceived as experienced in the lettings market. Often in fact, their main/sole source of income is dervied from their rental catalogue, hence their occupation is termed as a professional landlord.

Hope this helps

Holly

nathan1986

Thanks for that Holly Hobby. I did think it was something along those lines but was not certain.

Nathan