Turning my rent into a mortgage

Noviceinvestor

We live in London and pay £1250 a month in rent. Given the competition in the local rental market, this is likely to rise every year. Would we be better off paying this into a mortgage instead - and could we? We own a buy-to-let property in the same area which we paid £270k for, with a mortgage of £178k so we have some equity (property is gently rising around here as it's a nice and popular part of London). Our mortgage is interest-only and we're making a nice profit, it rented within a day of being advertised, so is looking after itself well. The mortgage is only £650 a month so it makes us think that, if we could get another interest-only mortgage put for a property which we would live in ourselves, we could actually cut our expenses - given the rent we pay now. But what is the likelihood of lenders being willing to do this? We don't have any deposit right now but might do later in the year, when another investment matures. Any tips from the experts out there would be very welcome.:D

kingstreet

When you have a deposit, subject to income and credit worthiness, you should have no problem getting a residential mortgage. You are unlikely to get interest-only as the market for such has hardened considerably in the last few months.

Noviceinvestor

Thanks Kingstreet. Would our existing equity count for anything do you reckon, or is it all irrelevant to a new loan?

kingstreet

You'd have to remortgage the BTL to raise capital from the equity if you wanted to use it in some way to facilitate your new purchase. The normal maximum LTV for a BTL remortgage is 75%.