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HELP! I own a flat outright and want to buy another. What type of mortgage?
Options

MoneySavvy_2
Posts: 8 Forumite
Dear Forum
I am currently weighing up whether or not to buy a 2nd property. Here is my story:
I've owned my flat outright for over 5 years now. The 2nd flat of the converted house I live in is up for sale (2 flats in total, one of them is mine). I'd like to buy and let the 2nd flat but do not want an expensive buy-to-let mortgage. The mortgage broker I approached is pants, economises with advice, support & mortgage details and I need to drag everything out of his nose. I'll have to drop him but in the meantime, what are my mortgage options? And do I, at any point, need to "declare" that I am a property owner although I don't have a mortgage? Am I classed a first time buyer although I had a mortgage up to 5+1/2 years ago?
Also, can anyone recommend an EXCELLENT whole-of-market mortgage broker / financial advisor in North London or Herts who is actually genuinely interested in working for his money?? I need some good mortgage advice on how to try and pay the 2nd mortgage off in 10 - 15 years.
My head is smokingggg.... :mad:
Many thanks for your tips, advice, thoughts and time to reply.
I am currently weighing up whether or not to buy a 2nd property. Here is my story:
I've owned my flat outright for over 5 years now. The 2nd flat of the converted house I live in is up for sale (2 flats in total, one of them is mine). I'd like to buy and let the 2nd flat but do not want an expensive buy-to-let mortgage. The mortgage broker I approached is pants, economises with advice, support & mortgage details and I need to drag everything out of his nose. I'll have to drop him but in the meantime, what are my mortgage options? And do I, at any point, need to "declare" that I am a property owner although I don't have a mortgage? Am I classed a first time buyer although I had a mortgage up to 5+1/2 years ago?
Also, can anyone recommend an EXCELLENT whole-of-market mortgage broker / financial advisor in North London or Herts who is actually genuinely interested in working for his money?? I need some good mortgage advice on how to try and pay the 2nd mortgage off in 10 - 15 years.
My head is smokingggg.... :mad:
Many thanks for your tips, advice, thoughts and time to reply.
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Comments
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MoneySavvy wrote: »[ I'd like to buy and let the 2nd flat but do not want an expensive buy-to-let mortgage.
You don't really have much choice. If you wish to use a let flat as security for a mortage then the mortgagor must agree to that.
You may get a better rate if you allow your own flat to be used as partial security, but in the event of you being unable to keep up the repayments you risk losing both flats.A kind word lasts a minute, a skelped erse is sair for a day.0 -
You'll not be classed as a first time buyer, that's only if you've never had a mortgage in your name - ever.0
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Well, I guess you could re-mortgage your own flat and buy the other flat with the proceeds (assuming you have enough equity to buy it outright). I'm not sure though whether lenders would like this reason... We have remortaged in the past to buy a holiday home abroad which was no problem. Mortgage experts in the forum would know better. Also remember to look into tax implications on the rental property as the mortgage interest is a deductable expense.0
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MoneySavvy wrote: »I need some good mortgage advice on how to try and pay the 2nd mortgage off in 10 - 15 years.
That's not mortgage advice. You will be running a business so preparing a financial business plan may be a good first step.0 -
How much deposit do you have?"You were only supposed to blow the bl**dy doors off!!"0
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Firstly - you are not a first time buyer, as you have already held/hold an interest in property. So you are liable to stamp duty at 125k up.
The 2nd flat you want to buy, will need to be effected on a buy to let mortgage - as it is your intention from inception to let it.
If you do not want to effect a buy to let mortgage, and already have some decent capital put away, you could consider the remortgage of your own unencumbered flat, to release equity to pch the 2nd. (subject of course to you statisfying lender status and criteria assessments.
IF you ensure there is a clear audit trail, between the monies released form your own property to purchase flat no2, you will still be able to offset your rental income against the loan for income tax purposes.
Obviously if doing a residential remortgage, this will be based on your own income (although I do believe that Nationwide BS - will also take a proportion of rental income on an unencumbered BTL property).
You need to be financially prepared for times of no rental income (loss of, or indeed non-paying tenants), and all the legalities that must be met as a landlord.
There is an excellent sticky on the forum re BTL and the requirements of landlords, and highs and lows to consider protecting yourself against.
Think v carefully, if you want your tenant to reside in the same building as you too ... happy to receive knocks all hours of the day and night for you to sort out dripping taps, stuck windows, faulty switches, blocked loos .. etc .. etc .. etc...... unless of course you choose to have the letting professionally managed via a letting agt, enabling you to retain your anonmity.
Hope this helps give food for thought.
Holly0 -
First of all, thank you everyone for your replies.
So here are a couple of dumb questions coming up, but if I knew the answers I wouldn't be posting them.
Owain Moneysaver: "If you wish to use a let flat as security for a mortage then the mortgagor must agree to that".
Stupid Q: Why would I need to use a flat as mortgage security? Would my income not be sufficient to apply for a mortgage (apparently I earn enough)? Remember that I have no mortgage to pay on my existing flat so my income could cover for in-between tenants.
"You may get a better rate if you allow your own flat to be used as partial security, but in the event of you being unable to keep up the repayments you risk losing both flats".
Q: Exactly, so why would I?
holly hobby, mainthestreet, Mrs Z:
A: My own property has not risen enough in value for me to remortgage to release equity. I do, however, have approx a 20% deposit to put down on the 2nd property.
"Think v carefully, if you want your tenant to reside in the same building as you too ... "
A: I wish all landlords were far more conscientious and would be there for their tenants rather than merely raking in rental income. I plan on looking after my property(s)
Thrugelmir "You will be running a business so preparing a financial business plan may be a good first step."
Stupid Q: A business plan to let a flat??? Tell me more...
Ferferksake: "You'll not be classed as a first time buyer, that's only if you've never had a mortgage in your name - ever"
Stupid Q: As I currently have no mortgage, am not a first time buyer, then what am I? I am not remortgaging....
My head is throbbing even more now. :mad:0 -
You must have a property to be used as the security for a mortgage or it would not be a mortgage. Income is needed to support the loan, not secure it. If you could raise some funds on your residential property this would tend to be at a lower rate than a BTL mortgage meaning you could potentially keep payments down. Any shortfall would need to be raised in a BTL with a higher rate.
Having a tenant in the same building could be both beneficial and a nightmare. You will be able to keep an eye on the property which could provide you with comfort in the event of a good tenant, or a whole heap of trouble in the event of a poor one. Also you may get a knock on the door every time something goes wrong. Plenty to consider here.
A BTL is a business and needs to be considered as such. It is not a get rich quick scheme. Consider the possible pitfalls as well as potential gains.
You are not a first time buyer as you have owned a property previously. Ntohing to do with holding or having held a mortgage. You are a 'next time buyer' if you really require a term.I am a Mortgage AdviserYou should note that this site doesn't check my status as a mortgage adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice.0 -
Could you not rent out your existing (mortgage free) flat and purchase the new one on a residential mortgage to live in? No buy to let involved.0
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You say that your existing property is unencumberd, but hasn't "risen enough to allow equity" to be withdrawn. That confuses me on an unencumbered property, but would be relevant on a mortgaged one.
If you don't want to remortgage your own flat, and only have 20% deposit - then you are looking at a buy to let mortgage - which you asked for help to avoid. ( and why peeps are discussing your private residence as part of the mix).
Having a tenant so close, well as I said for your assistance, could be a nightmare if you get one that complains over the least thing i.e squeeky hinges on a cupboard door (yes I do know someone whose tenant insisted the landlord should oil the hinges not him !). It was just a consideration for you, but you are obviously happy to be hands on when needed.
If you effect a buy to let mortgage, the affordability will be assessed on the rental income being 125% of the mortgage using 6% interest rate as a ball park fig.
There is only 1 lender I know of whom will consider an 80% BTL for a first time landlord.
Zenmaster suggestion is another alternative to look at - if you are adament that you do no wish to effect a BTL morgage.
Hope all our suggestions have helped with the decision process ...
Holly0
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