Let to buy to let me buy

blzbob

I have a house worth about 240k with about 60k equity

Myself + girlfriend want to buy a new build worth about 400k which won't be complete for 7 months but they won't sell to me unless I am in a position to move, ie house sold (its the best plot on the site so I would prefer to get it than miss out for a few grand - yes I know I am on moneysaving expert!). My current house is a reasonable investment property being close to the train station

Plan - when it comes on market (ie 6 months to build)
1. Effectively swap my current mortgage to a lender that will allow let to buy and get a let to buy quote
2. Get mortgage offer for new property based on existing property being ignored (under let to buy)
3. Attempt to sell house to time it to match move, but if not (or if it falls through) shift to above plan

Is this doable? - ie will the financial institutes allow all this. Also, not having intended to be a landlord I don't recognise half the brands in the market, which are the "safe" brands?

Without the equity from the existing house things are stretching (affordability is fine but low multipliers are not). What counts towards salary both myself and girlfriend have target bonus %age , we have several share incentive plans, car allowances, and long term share rewards as well as BUPA etc. (which are substantial and have always paid out but we havent got yet) - do these count or do enough lenders go on affordability?

I would look to get advice - is there a criteria to use to judge the local IFAs (qualifications etc.), its the cleverness with our reward schemes and expertise with buy to let and the mortgage companies I am looking for (I would probably pay fees get refund commissions - given I am looking for some work ideally I won't actually use)

silvercar

So at the moment you have a £240k house, £180 mortgage and £60k equity. You want to buy a house valued at £400k. Ideally you sell your house and then will need a mortgage on the new home for £340k with the £60k equity transferred. This would be 85% mortgage so you should be able to find a high street mortgage, assuming your credit rating is fine and the affordability works. Look for a whole of market mortgage advisor rather than an IFA.
Try and find someone fee free rather than woory about cash back deals. If you have someone recommended to you that does charge a fee, it could still be worth going to them.

option B is to let your current home. Most buy-to-let (let-to-buy would be classified the same) mortgages require 15% equity (occasionally 10%) and that the expected rental income outstrips the interest only mortgage payments, preferably by 25%. check the potential rental income for your current home. 15% equity on £240 k is £36k leaving you with only £24k to release for the new place. So your new house mortgage will temporarily be larger.

If you do find a lender to do all this you will have property valued at £640k and mortgages of £580k. Could you afford this if the rental property was empty for a time? can you afford the running costs of 2 homes? Moving costs will eat into your savings (stamp duty and estate agents fees being big expenses).

I did something similar (bought out a house in the chain as a BTL to enable my purchase) but I had a lot more equity and made sure I had reserves in case the property didn't let. I think your equity is not high enough to risk your plan.

Try approaching the builder to see if you could part exchange your current home. If not I would put it on the market now and try and exchange with a delayed completion (or move out and rent for a few months).

blzbob

Thanks silvercar.

So option A is ideal provided we get a flexible purchaser but thats why i want the contingency - ie I can commit to purchase the new house and make sure it is ours now, with buy to let agreed whilst attempting to sell my existing house - removing the stress of chains.

We can afford empty house for a time (from affordability we can afford over 3k interest repayments and could manage 4k on an occasional basis), which is one of the reasons to move and relative comfort of owning 2 properties/risk acceptance. Rental on existing house looks like 850pcm, plus its about 5 mins from a train station

Have 30k in investments I can free up as needed and so across stamp duty and fees. Am also saving 1500 a month

Tried builder, they won't exchange until a couple months before (seem terribly reluctant to sell properties compared to every other builder I have seen) and unsuprisingly the one we want (best position on site) they+I think will sell before then.

Am planning to go on the market but still want to get safety net setup, so anyone know best way to go about my plan. Ta

silvercar

850 per month would probably give you a mortgage smaller than you have at the moment on a formal BTL offering. I really think you should sit down with a mortgage advisor now to find out whether your calculations will be possible or not.

morleymackam

I'm in exactly the same position. Exchange on new build takes place in 2 weeks (if we go ahead). We have to put down 19k deposit. Ideally our house is sold and completed before new build is ready and we have rented accomodation for the mean time.

But we need a plan B to make sure if our sale falls through we don't lose the house we want and 19k for the privledge.