Advice needed re mortgage

ktk

Due to the death of my FIL, we have enough money to pay off the shortfall in the endowment, thank goodness. However, we are considering buying a small investment property (less than £200,000). My question is: can I take out a mortgage on my existing property, which is worth about £350,000, and use it to pay for the investment property? Is this a good idea or not? What might my other options be.

kingstreet

Assuming you have a cash deposit, you could always raise a BTL product on the property to be let. This will depend on the rental income you expect to yield. Some lenders have a minimum personal income requirement too.

If you don't have a deposit, it may be more sensible to raise all the money on the current property using a residential deal, as long as you have sufficient income to do so.

You really need to spend some time studying the responsibilities of being a landlord and finding a good independent or whole market broker to advise you on something like this.

Wutang_2

ktk wrote: »

Due to the death of my FIL, we have enough money to pay off the shortfall in the endowment, thank goodness.

Thank goodness, nice

ktk

Thanks. It is my intention to live in the property, at least during termtime to save my daily commute, so it isn't really a BTL deal I am looking for. Will this make a difference?

MRG

So you have a property that you now outright own that is worth £350,000 and you are looking to buy an investment property for £200,000 but you need to raise the deposit on your existing property?

or are you raising £200,000 on your current property to buy the investment outright?

Which property are you intending to live in?

Apologies if i've got this confused.

ktk

I would like to use the money raised on my existing property to buy a new property. My family would live in the existing property and I would live in the new one, at least during the week.

MRG

ktk wrote: »

I would like to use the money raised on my existing property to buy a new property. My family would live in the existing property and I would live in the new one, at least during the week.

So you would mortgage property A (350k) so that you have a residential mortgage of 200k on that one and buy the new investment property B (200k) cash with no mortgage?

Im just trying to determine how many mortgages are involved.

ktk

Yes. Is that possible? Does it make sense to do that? I would like to have an interest only mortgage, as we will be in the possition to pay off the £200k in five years time. I am very grateful for the advice!

MRG

Yes your able to do a residential mortgage on your current property to raise the funds to buy the new property.

I just wanted to make sure as BTL was mentioned but in this case its not needed.

You would also be able to do it on an interest only basis due to it being a good loan to value (Under 60%)

Just make sure you approach a lender that allows you to use sale of property as a repayment vehicle of the interest only loan. (Even though you say you will have funds to pay in 5 years)

ktk

MRG Thanks for that. It would appear I am not barking up the wrong tree! My current mortgage is with the Halifax, would they be able to lend under those circumstances. I am just wondering if it is easier, and more cost effective to stay with my current lender than transfer to a new one and pay fees. If so, do I pay off the existing loan first, or extend it?

kingstreet

kingstreet wrote: »

as long as you have sufficient income to do so

So there's a mortgage already on property 1? How much?

You are talking about borrowing £200k + what you already owe and the property value is £350k?

Doing it this way is going to depend on you having enough equity and enough income to support the whole mortgage. What will the total mortgage be?

I'd say the rates you are likely to be offered to do this mean you will be better off looking for a new lender rather than trying to stay with Halifax.

find a good independent or whole market broker to advise you on something like this

Is still the best next action.