Two residential mortgages? and How can I purchase a new property? Advice Please

rossyl

Hi

I would greatly appreciate your advice as we are looking to take matters forward this Saturday. If any further info is needed, please let me know.

Bob (me)
- I own my home.
- I have a mortgage with the Co-Op.
- Property is worth £325k.
- Places for People own 40%
- Mortgage is £135k
- Mortgage is a tracker on a great rate above base rate, it is past the 3 year period, it hs no exit fees.
- I earn £60k a year

Mary (fiancee)
- Owns her home
- as a mortagge with the Co-Op
- Property is worth £700k
- Mortgage is £145k
- Mortgage is in 2 nd year of 3 year term, exit fee applies.
- Mary earns £70k a year

Mary Intends to
- Rent out her property
- Get a Buy to Let or Let to Buy mortgage for approx £450k (property is worth £700k).
- Rental income of property is £2,000 - £2,500 pcm.
- Pay off her mortgage of £145k.

We intend to
- Buy a house valued at £650k
- Use the £305k from the Buy To Let as a deposit on the mortgage for this house


What is the best way to do this please?


The main sticking point appears to be my mortgage.

The Co-Op seems to only allow one residential mortgage per person. Mary will have paid off her mortgage via the Buy to Let and only have a Buy to Let outstanding. I will need to sell my property.

The mortgage is only £550pcm on my property and Mary's flat will pay for itself (once it rents). We therefore don't mind proceeding with the purchase of another property whilst still owning my property. Properties in my area of London tend to be sold in a week or two, so I am not overly concerned that it would be on the market for very long.

I would be very very grateful for you advice

Thank you!!

GMS

If you can sell your property quickly then why do you want to purchase another whilst still owning it.

Sell yours and ask Coop if you can 'port' the mortgage to the new property. This would also involve a 'transfer in' of equity so Mary becomes joint owner. Check Coop will allow this.

You then have the same rate on the same borrowing as before with any additional on a new rate.

Alternatively sell yours, clear the mortgage and arrange a new mortgage elsewhere (assuming it works out better than Coop's offering)

The Buy to Let may not raise as much as you hope depending on rental.

Have a chat with a broker.

rossyl

GMS wrote: »

If you can sell your property quickly then why do you want to purchase another whilst still owning it.

Sell yours and ask Coop if you can 'port' the mortgage to the new property. This would also involve a 'transfer in' of equity so Mary becomes joint owner. Check Coop will allow this.

You then have the same rate on the same borrowing as before with any additional on a new rate.

Alternatively sell yours, clear the mortgage and arrange a new mortgage elsewhere (assuming it works out better than Coop's offering)

The Buy to Let may not raise as much as you hope depending on rental.

Have a chat with a broker.

But waiting to sell my property will result in losing purchasing a very good propety that rarely comes up for sale (haven't seen anything like it in the year I have been looking).

Hence the need to have two mortgages.

holly_hobby

That wasn't clearly explained in your first post, hence GMS response !

In that case you have already answered your own Q - Co Op won't allow more than 2 resi mortgages with them.

So you are looking for a 2nd mge arrangement. As your property is not to be let, it won't come under a let to buy arrangement, so your income shall have to cover both your existing mge and new arrangement.

You may be best trying to sell your own to simplify matters - especially if as you say you are in an area of high demand.

Hope this helps

Holly

kingstreet

Surely, all you have to do is take the mortgage for the new purchase with another lender, not the Co-oP?

It can only control the "one mortgage per person" issue if you apply to it for the second one?

If the new lender "charges" you by deducting the cost of your continuing mortgage from your income, your two incomes should be more than enough to cover the £350k (ish) you'll need to borrow.

On the BTL issue - the minimum rent for that £450k mortgage is going to be around the £2,400 mark, so make sure it stacks up before spending money on fees. (5% rate / 125% of IO).

GMS

rossyl wrote: »

But waiting to sell my property will result in losing purchasing a very good propety that rarely comes up for sale (haven't seen anything like it in the year I have been looking).

Hence the need to have two mortgages.

BRidging finance could work in the very short term whilst you wait to sell your own property. Expensive though. Other than that you need to arrange a mortgage elsewhere (as has been said) but keeping your current mortgage will impact on borrowing.

The Buy to Let on the flat would need to be arranged to provide the deposit so you are looking at around 4 weeks minumum for this to conclude. If you can sell yours within a week or 2 then you could pay off any finance pretty quickly meaning minimal costs.

You could maybe get a decision in principle with a lender to enable you to put the offer in on the new property. Figure from there what you want to do and how quickly it can be done

TonyRimmer

Hi there are other lenders that will allow you to have 2 residential mortgages based on affordability. The buy to let scenario will be excluded providing the rental income covers 125% approx of interest charged at say 5%.
If you are on joint income of 130k then one lender that I know will allow the two mortgages will consider lending you 4 times your joint income aggregated across both mortgages and any other debt ie £520k

Hope this helps

Tony

rossyl

Thanks to you all for a lot of info.

We shall have to review the Buy to Let amount, with regard to the 125% of interest, at a rate of 5% interest of the mortgage amount.

I am trying my best to arrange a meeting with the Co-Op (Britannia now) mortgage adviser on Saturday to discuss and decide a course of action.

I've also spoken to a couple of Mortgage Advisrs who seemed relaxed on the situation, given salary and what we intend to do.

getmore4less

Why have you waited to find a place to start this process.

You have been looking for a year could have had yours sold or the other let by now.

If you can get yours sold you may be able to port both co-ops to the new place, save on penalty fees, but would restrict further lending to be from the co-op.

Conrad

Halifax, Santander and others DO allow another mortgage without existing mortgages being simultaneously repaid.