Re-Mortgage????

trooperdog

Hi,

please could someone give me some advice on the following:

I have had a mortgage for 4 months on a 2 year fixed rate of 5.9%. with Abbey

I purchased the house for £105k with a mortgage of £94k (90%LTV)

the house was a state and I have spent some money on it, its now looking quite nice there are 3 other houses on the street identical to mine each at £150k.
I think mine is worth at least £135k.

Now, what I would like to do is possibly borrow more on my mortgage to use as a deposit for another house to rent out. I dont fully understand the remortgage system hence the post.

Im looking to buy property around £70k.

1. can anyone tell me if this is possible
2. if so how does the mortgage company value my house??

I have tenants available straight away and a joint income of £47k so Im unaware of any affordability issues,
There are a few more considerations i have but for now i just want to know if any of this would be possible.

Thanks in advance
TD

Yorkie1

I am not an expert but I think there's a rule about not being able to remortgage within 6 months - but others will be along soon.

kingstreet

There is a six month rule, so an early application for a remortgage is going to get short shrift.

When you do apply, a surveyor is going to have to agree with your valuation and that may not be the case...

You'll have early repayment penalties to pay totalling around £1,900.

A new lender is likely to limit your remortgage to around 85% of the new value, or £114k on a value of £135k if you achieve that.

domcastro

could you get "further borrowing" and use this as the deposit for next place?

Thrugelmir

At an interest rate of 5.9%. You may make a better return paying down your existing mortgage rather than speculating with an additional property at this point in time.

trooperdog

Thanks guys, it will probablly be after the 6 month period by the time I go ahead, thanks for the info on the 85% LTV thats news to me

trooperdog

OK would this work

Suppose I do achieve £135k

mortgage £135k less current balance of £94k and £2k early payment charges etc leaves me with around £39k.

£39k less £20250 (15% deposit for new mortgage) of £135k leaves me £18750

That should be remortgage sorted.

I should now have £18750

new housed value £65k (could be less but just to keep worst case scenario)

20% deposit of £65k is £13k

£18750-£13k leaves me £5750 for fees etc

My current mortgage if £676 PCM over 20 years

I estimate at worst case 6% on both new mortgages one for £114750k @ £817 PCM and one for £52k @ £373
total £166,750k @ £1190 PCM over 20 years

I would expect worst case a rental return of £500 PCM leaving me to pay £690 which is £14 PCM more than I pay now!

Im aware of the maintanence fees insurances etc but have that covered

Can anyone see if/why a lender would see any negatives with this and any obstacles that may arise? to me it makes financial sense both short term and security for the long term? also would I be better speaking to my current mortgage provider to cover both loans, I assume they would rather keep my custom??

Thanks
TD

trooperdog

Also just out of interest is there any one that will lend one mortgage on two properties?

dimbo61

when you have valuation done after 6 months the surveyor will look at recent sales !!!! guess what you buying at £105K will be the first thing he/she will notice so unless the 3 other houses on your road all sell for £150K in the next 2/3 months your house will be worth £105K ( unless you have built a big extension ?)
Buying a BTL without a 25% deposit is a none starter

trooperdog

really the house next door went for £130k the week before I bought mine. I got mine cheap because it needed refurbishing Ive spent around 10k getting it upto scratch.

Who does the valuation?? Im getting an EA in tommorrow for a bit of advice!

trooperdog

As for the BTL thats understood and with a little jiggle of the figures I still get around the same outcome! although what would be the minimum loan on a BTL??