2nd property

83jack

Hi everyone, im after some advice hoping that someone will be able to help me.

I currently own a 2bed semi detached property mortgage of £85k which is valued at £110k - Ive recently found an apartment for sale (£49k) which is a reposession and i was thinking about putting in an offer on it.

My questions / toughts are:

• Currently earn £28k - could i get another mortgage if i re-mortgage my property
• I was going to buy the apartment and rent it out - can i get a tracker mortgage rather than a BTL?
• Would i have to pay additional tax??

Any help or information someone can give me would be great.

Thank you

Beckyy

You would have to declare all income, and pay tax on rent (assuming you earn above the minimum personal allowance).


Do you have any other debts or finance? How much is your current mortgage per month?
Do you have any savings for a deposit, BTL usually need at east 15% deposit?

Werdnal

If you are mortgaging the letting property it must be BTL, but you can raise cash against your own property on a normal mortgage.

You would also need to check that if the apartment is leasehold, that the lease actually allows you to let it.

You need to declare your rental income for tax.

Much more info on the do's and don't of letting can be found here:

http://forums.moneysavingexpert.com/showpost.php?p=41160642&postcount=12

G_M

Just as with a residential mortgage, various BTL 'products' are available, including fixed rates, tracker etc.

As Werdnal says, there is a lot to find out and this will start you off.

83jack

Thanks f all your replies so far.....my thoughts were to getanother mortgage but to re-mortgage my own house for the deposit (ive got about £20k equity in the property) and the apartment is £49k so hopefully that will cover 15% of the deposit.

My mortgage at the moment is £390 per month, and if i am lucky to purchase this apartment based on purchase price of £49k minus 15% deposit, the apartment should cost £250 per month ad my income would cover both.

Does leasehold on an apartment man that i would not beable to rent this out?

G_M

83jack wrote: »

.
Does leasehold on an apartment man that i would not beable to rent this out?

Sorry - I don't have access to your lease and nor does anyone else here!

Have you read the link above?

Werdnal

83jack wrote: »

Does leasehold on an apartment man that i would not beable to rent this out?

A lease can restrict all sorts of things, from whether or not pets are allowed, to the minimum age of the person living there (as in retirement developments). Some leases prohibit letting as they want the owner only to live there, rather than having different tenants coming and going possibly every 6 months. If you are specifically buying the property to let it, you must read the lease (or get your solicitor to check it) before you commit to buy, otherwise you may be faced with not being able to let, or having to pay the freeholder for permission - they can set their own price!

You will also have other costs if it is a leasehold property, like ground rent, service charges, building insurance and/or contributions to a "sinking fund".

Hillbilly1

I would be worried about the LTV ratio on your first property of yu take even £5k out of it. It doesn't take much of a move downwards in house prices for £90k mortgage to be only 5-105 of LTV and thenre-mortgaging could be tight.

If there are these cheaper properties out there, save hard for 6 motnhs and see if you can do it without chnging your first mortgage.

thriftychap_2

Im sorry if i come accross rude but if it is necessary for you to ask such basic questions i would have to question if it is a good idea for you to get into BTL property at this time.

Notmyrealname

83jack wrote: »

My questions / toughts are:

Currently earn £28k - could i get another mortgage if i re-mortgage my property

Yes but you'll get kicked in the nuts because of the LTV.

I was going to buy the apartment and rent it out - can i get a tracker mortgage rather than a BTL?

You HAVE to get a BTL. There are tracker BTL mortgages. However be aware that you'll need a 25% deposit for BTL and the rental value will need to be 130% of the interest portion of the monthly mortgage payment.

Would i have to pay additional tax??

Yes. You will pay tax on all profit. Some of the expenses you can offset against rental income:

INTEREST ONLY portion of the monthly rental, not the whole amount.
Repairs
LL insurance
Gas safety check
Advertising
Agency fees if you use a letting agent.

Notmyrealname

83jack wrote: »

Thanks f all your replies so far.....my thoughts were to getanother mortgage but to re-mortgage my own house for the deposit (ive got about £20k equity in the property) and the apartment is £49k so hopefully that will cover 15% of the deposit.

You will not get a BTL mortgage with only a 15% deposit. There are very few 20% deposit.

Your LTV of the remortgage of the current property would mean you'd only be offered high interest rates if you took more than a few thousand out.