Could we get a 2nd Mortgage? Advice and opinion please.

Janine_W

My partner and I want to buy a house togther, however we would like to keep my flat where we currently live.

Our plan is to rent out the flat -we belive that we'd get more than enough to cover the mortgage meaning the profit we could save in case there is ever a time when we have no tenant, or we need to make repairs etc.

However I have no idea how feasible this idea is - is it likely that we'd get a second mortgage? We'd like to borrow up to 200K and have a joint income of £55k.

Secondly -and this is really the major hitch - even if we could get a second mortgage is there any way we can avoid a large deposit? As we are paying the mortgage on the flat we can't save that much each month..so to get 20k would take us years....
I have about 30k equity in the flat so is there any way we could release that to use as a deposit? We do not want to move back home with our parents in order to save..we'd rather just sell the flat than that.

Any advice would really be much appreciated. If you need any more info just ask...
Thanks All.

hcb42

I wouldnt think you can avoid the deposit - both for the house, and I dont think you will get a BTL mortgage without a reasonable deposit left in the property either.

BoGoF

Any particular reason why you want to keep the flat?

Have you established that your lender will give you consent to let? There is no guarantee they will and if they do you may have to pay fees and/or revert to a higher rate.

Not to mention tax, landlords insurance and other costs.....

Plus you are looking at minimum 10% deposit.....more for a better rate.

ACG

If your lender will allow you to let the flat out and release some of the equity in it then it doesnt seem like it will be impossible for you to get a second Mortgage.

It will be tight but presuming you can let the property for 125% of the Mortgage repayments then it should be ok.

But im thinking the same as the above poster, is there any reason why you wish to keep the flat? You will hve the hassle of looking for tenents, arranging gas safety checks and fixing everything, unless you pay a management company and that can be anywhere upto about 10% of the monthly rent if not more.

Thrugelmir

As saving for a deposit seems out of the question. Sell the flat. Increasing the initial deposit on the new property will increase the number of mortgage options available to you. On the sum you are intending to borrow even 1% per annum makes a sizable difference.

Protect your equity ( initial deposit) by having a deed of trust drawn up. To cover the eventuality that your relationship breaks down.

Janine_W

Thanks all. I wanted to keep the flat as an investment really -I have a local government pension which could end up being worth a lot less, and my other half doesnt have one -so we thought we could keep the property and sell iut when we need to..even though thats a long time away...
I also wanted to keep it in case my sister wanted to live in it after uni, and I guess partly for security just in case things didint work out and I needed somewhere to live.
However I guess I really need to explore my options with Abbey re consent to let etc and do my sums. I think i could achive 125% now at my currnet rate, but of the rate went up it may be more difficult...
We have considered at letting it to the Council as they seem to provide a good package , although I think advice on that is for another forum..

Thanks for the advice re deed of trust - as much as you hope it won't happen, it seems like a sensible thing to do.