mortgage/remortgage

pigtails1xx

Dear all,

I currently own a property that has 50,000 equity in it and wish to purchase a new property valued at 160,000.
I would like to rent out my current property (valued at 100,000).

Questions are:
Should I take out as much equity as possible through remortgage to put down a substantial deposit on the new property?
What type of mortgage should I go for- to remortage & new mortgage?

Regards

Gary123456790

Hi,

I presume you currently have no savings for a deposit on the new property, hence the question about using additional borrowing on the old property? (You would not need extra savings if you were selling and buying at the same time.)

On a BTL mortgage 75% LTV is probably the limit so thats a 75k mortgage. As you've got 50k equity that means if you could increase the BTL mortgage to 75% you'll release 25k, although you may struggle to do this in reality.

To buy a property at 160k you'll need min 15% deposit which is 24k.

You'll also need to pay stamp duty, moving fees, any gas inspections etc required to setup the old property for let. You will also be hit with high interest rates on BTLs, especially for high LTVs.

It is possible to let out a property on a residential (non-BTL) mortgage, this is called consent to let, if the lender will grant it. But if you combined this with asking to put the LTV up to max, it is probably unlikely.

The BTL may affect your affordability on the new house so this depends on your earnings if this is an issue. This is because the BTL mortgage payment needs to be paid even if you have no tenants, so mortgage companies will treat part of the btl mortgage payment as an outgoing.

It is also possible that the rent would not cover the mortgage if you manage to max the LTV on the buy to let, so this would mean you have an extra outgoing there.

Is there a reason why you need to move now, and why you want to let the property out rather than sell?

You are limited by doing this as it ties up some of your equity - you cant have a BTL with no deposit.

Gary.

ACG

There are a few different options here depending on whether your current lender will give you consent to let or not.

It might be best speaking with a broker as i would end up writing an essay explaining the different options potentially available.

kingstreet

What's the monthly rental from the current property going to be?

secondtoughest

Can I hijack this thread slightly?

I have recieved consent to let by my lender. My property is worth £95,000 and my remaining mortgage is £68,000 (around 71% LTV, if my calculations are correct). I currently pay £460 per month for the mortgage (£400) and service charge (£60). Current rental prices in the postcode for properties similar to mine around £600 per month.

Using these calculations, assuming I meet lending criteria for the new mortgage would I be able to get another mortgage on another property I intend to live in myself?

Thrugelmir

secondtoughest wrote: »

Can I hijack this thread slightly?

I have recieved consent to let by my lender. My property is worth £95,000 and my remaining mortgage is £68,000 (around 71% LTV, if my calculations are correct). I currently pay £460 per month for the mortgage (£400) and service charge (£60). Current rental prices in the postcode for properties similar to mine around £600 per month.

Using these calculations, assuming I meet lending criteria for the new mortgage would I be able to get another mortgage on another property I intend to live in myself?

Please start another thread. As had to follow otherwise. :beer: