Deposit / Letting Advice

freefly

Good morning all,

I'm loking for some advice from you wise people here regarding how best to orgnise my current finances, I'll try to keep it brief.

I'm currently two repayments from completing my current mortgage on my first property valued at approximately £90,000. My current mortage is an offset with a rate of approximately 5%.

I wish to use this capital to form a deposit for a larger propety, I am interested in letting my current property and do not wish to sell it unless it is not ecenomically feasable.

Having switched lenders about halfway through repayment of the mortgage my current morgage was for approximately half the value.

My main questions are as follows;

- Is it possible remortgage a property for more than your original loan amount as long as it obviously is not more than the value of the property?

- Would it be sensible to complete my current mortgage and seek mortgage with a new lender or request a remortgage with my current lender?

- Is there an efficient way to use equity in a property as deposit for a new mortgage whilst retaining my original property for rental.

Any advice is greatly appreciated.

Kind Regards,

Freefly.

bigadaj

You will need a but to let mortgage int his case, so commercial and higher rates. You can normally remortgage up to 75% of the property value and use this as the deposit for your new house, however for tax purposes it is normally good to ensure the morts eg is in conniption to the rented house as you can offset mortgage interest against rental income.

Bank will require rent to be higher than the mortgage payments, typically by 20%. also don't assume you can easily rent, look at the local Market and see what similar pro sties are going for, speak to local agents about the market etc.

Remember despite references And deposits you could get the tenant from hell, so factor in the possibility that you might not get rent for several months, will age to redecorate the house every couple of years, therefore in a squeeze you wold want to be able to cover your house and the rental payments on you income alone.

Dave_Ham

The plan is feasible, although you will need to either get some decent advice or do a lot of reading on here.

It is impossible to be specific without knowing more about your age, income, credit score and a few other specific bits of information. Some general considerations below:

• You can borrow upto 75% of the value of your existing home. This technically needs to be on a buy to let/let to buy basis, which means the rates are not as competitive, fees are larger although you can get interest only
• To optimise buying your new property, you would want to achieve a 25% deposit, as this will score you a better rate with a new lender.
• Depending upon whether short term income or long term cost efficiency is your plan, will depend upon whether you raise more on interest only buy to let or more on likely repayment mortgage.

Hope some of this makes sense, pay for decent advice now as will advantage you hugely in the future.


You are in a decent position and buying when the market is low relatively, good to take your opportunity.


Good luck

freefly

Thank you bigadaj and Dave very much for your advice. I completely agree with you and think getting some sound financial advice necessary.

I very much appreciate your input and hopefully will put it to good use.

Thank you again.