Can we re-mortgage to buy place abroad?

hw456

I am looking for a bit of advice if anyone can help

We currently have £69k mortgage and house is worth approx £155k. We are interested in buying a small apartment overseas for rental income/investment and wondered if we could re-mortgage to release the monies to enable us to do this? I wasn't sure if lenders would be willing to let us do this or if we would have to take out a separate mortgage?

The apartments we are interested in are on a staged repayment, ie we pay 50% now and 50% in 2 years when complex is completed. Therefore was thinking could re-mortgage now and take out extra £25k needed for deposit and fix rate for 2 years. Then when 2 year fix is up, re-mortgage again to obtain the other 25% needed on completion.

Has anyone done this or does anyone know if this is possible? :rolleyes:

Any advice would be really appreciated :j

madbazoo

Yes this is perfectly feasible.

You need to arrange a new flexible mortgage so that you have the whole amount available but can draw down the money when you need it and so only pay interest on the amount you currently owe. That way you only pay one fee up front to your mortgage broker.

herbiesjp

Hi hw456

Welcome to the board.

This is straightforward and more and more people are doing exactly what you state here

As long as your income is sufficient to cover the new borrowing and any other debts you may have you should be fine

HTH

Deals_2

and managed to borrow another £40K on the property. think it was also based on the income and we did this with a company called Mortgage express but then we are self employed. not sure they would offer best rates at mo though.

hw456 wrote:

I am looking for a bit of advice if anyone can help

We currently have £69k mortgage and house is worth approx £155k. We are interested in buying a small apartment overseas for rental income/investment and wondered if we could re-mortgage to release the monies to enable us to do this? I wasn't sure if lenders would be willing to let us do this or if we would have to take out a separate mortgage?

The apartments we are interested in are on a staged repayment, ie we pay 50% now and 50% in 2 years when complex is completed. Therefore was thinking could re-mortgage now and take out extra £25k needed for deposit and fix rate for 2 years. Then when 2 year fix is up, re-mortgage again to obtain the other 25% needed on completion.

Has anyone done this or does anyone know if this is possible? :rolleyes:

Any advice would be really appreciated :j

hw456

Thanks for the replies, much appreciated. :j

One other point I need to check is anyones view on taking the mortgage as interest only? I know a lot of people tend to advise you against this, but any rental income generated from the apt we would put into an ISA with a view to paying towards the mortgage at the end of the fixed term. Is this wise? Or maybe we should just do a repayment mortgage and use the rental income towards our monthly mortgage cost? confused and not sure what would be best

Also, our joint income is £42k (I work part time) and our total debts are £10k (car loans - 1 due to be paid in 3 years and 1 in 4 years). Would this be sufficient for a £120k mortgage?

herbiesjp

Going interest only is the way most property investors set up

It also looks like you have done yyour homework and know exactly how you want to reduce your mortgage liability asap

The figures look fine on what you have posted, so you will have the pick of the market at your hands

HTH

madbazoo

hw456 wrote:

Thanks for the replies, much appreciated. :j

One other point I need to check is anyones view on taking the mortgage as interest only? I know a lot of people tend to advise you against this, but any rental income generated from the apt we would put into an ISA with a view to paying towards the mortgage at the end of the fixed term. Is this wise? Or maybe we should just do a repayment mortgage and use the rental income towards our monthly mortgage cost? confused and not sure what would be best

Also, our joint income is £42k (I work part time) and our total debts are £10k (car loans - 1 due to be paid in 3 years and 1 in 4 years). Would this be sufficient for a £120k mortgage?

If you don't intend to keep the property on a long term basis (more than 10 or 15 years say) then Interest only may be the better option as it will keep your interest payments down to a minimum and capital can be repayed when you sell. You will of course need to consider Capital Gains at the point of sale.

You could also consider a 'Buy to Let' mortgage if you intend to let it out on a permanent basis. The amount you can borrow is then usually calculated on the potential rental rather than your income. E.g. Based on the generally accepted formula a Rental of say £500 per month would cover a mortgage payment of £385 per month which with a starter rate around 5% would allow you to raise £92,000

Suggest you discuss the various options with a good mortgage broker. You will have to pay them a fee but only after you take out the mortgage so the advice usually comes for free.

hw456

Thanks again everyone, really good advice - will def look into the buy to let option as we intend to generate as much rental income as poss. Didn't even consider buy to let before so will be looking into this further...

Bye for now.