Switching from Residential mtg to BTL

ibz75

Scenario:

I currently own a home purchased in 2009 which has 85% equity (according to banks own calculations). I personally believe the house to be worth more - the house was bought whilst in Probate and needed modernisation which I have done.

I have 30K in cash and would like to have a home of my own, and a long term investment/future home for children (I am aware of the risks). My current home is in area which gets good rental income.

My 30k would allow me to reduce the equity on current home to 75%, and also have a 15% deposit for my next purchase.

Both mortgages will be in my own name, and my income is 32K pa.

Is this a possibility in the current mortgage rationing? What would be the best way to achieve this?

Thanks

GMS

Firstly see if your lender will grant you Consent to Let. This could save you having to put any money into the pot to reduce the Loan to Value.

Other than that you may be able to convert the current property to a Buy to Let and purchase a new property.

Speak to a broker to see the best way forward.

ibz75

Thought about the CTL option because even if it was refused I would probably be offered a BTL alternative.

However, if granted CTL would that not cause an issue with another lender since it would only be temporary?

Would it be best to let the property first (ctl/btl) before approaching another lender so that I can show the mortgage is self-sufficient?

GMS

If you go for a Buy to Let mortgage the rental income will be assessed by the surveyor. Usually this needs to be 125% of the mortgage interest.

CTL may be granted for a fixed period but this would allow you the set time to arrange something else if needs be. Rather than put more money into it that needed you could bank it and wait until CTL expired and use the funds to reduce any borrowing in the future.

Of course the only way to be sure you can continue to rent the place is to get a BTL mortgage from the outset.