Can any mortgage brokers help please? Complex lending scenario.

the_end_of_the_rainbow

Can any mortgage brokers help me please?

I want to buy a new house.

I currently own the following properties:

1. Residential proprty - current mortgage £2500 - can pay off by end of September. Current value approx £225000
2. Rental property 1 - Approx value £80000 - Rental income £350 per month - mortgage free
3. Rental property 2 - Approx value £75000 - Rental income £450 per month - mortgage free

Total mortgage free assets - £380,000

I want to purchase a new residential property. Current PP £395,000 however need to fund the purchase (and stamp duty) by raising funds. I have little available cash (having used all spare funds over last 3 years to reduce current mortgage by £100,000).

So I need to raise £400,000 but would have total assets on completion of £775,000.

New mortgage would be reduced substantially by selling existing residential property asap (good property located in village - most properties which come on market here sell reasonably quickly). Alternatively could rent out for £6-700 p/m.

Two incomes
Applicant 1 £48,000
Applicant 2 - £23000
Monthly rental income £800

No credit cards / loans but school fees of £945 pm (10 months so £747 averaged out)

Need new loan(s) to be interest only as much as possible to reduce payments until current residential property sold / rented then would change to Capital & Repayment.

I need a lender that will look at the whole picture - happy for lender to put charges on all properties if this helps.

Have spent all day looking at funding via residential loans, buy to let and let to buy mortgages and am now totally boggled.

Can anyone see a way that I can purchase this new property???

Thanks.

ACG

Interest only will be the hard bit if its a new residential property and not a BTL.

You might be able to do mortgages on the BTLs to free up a decent deposit, then raise a mortgage against your incomes. But the mortgage on your incomes would most likely be on repayment.

Are the BTL incomes declared? If so looking at it, it would seem possible.

the_end_of_the_rainbow

Thanks for your reply ACG

Yes, BTL income declared on Tax Returns.

Have looked at BTL mortgages but struggling with raising sufficient funds because of the rent to mortgage interest stipulation at 125% / 130%

It looks like the post office will do a 75% interest only residential loan at £296,250 - I could put forward pensions as security but projected cash free lump sums at retirement are only in the region of £145000 - do you know if this would be the maximum a lender would lend on interest only or could I still have £296,250?

ING have provisionally said 75% LTV (50% on interest only and 25% on capital and repayment) but again I'm not sure what they need re: repayment vehicle evidence.

Had originally hoped to do a BTL on current main residence to raise the 25% deposit but have been advised by Coventry BS that current residential property would need to be rented out for 6 months first before they would consider a BTL on it - does anyone know if this is the case for the rest of the market?

Simon_gloster

It would seem that you would need a min of £40k deposit, £100k if you lookinf for interest only.

Based on the equity in th btl's and no savings, it would prob have to be repayment.

Your tax free lump sum from pension would need to cover the whole debt if int only is what you want. You can combine repayment plans, so any remaining equity from your btl's can be considered. Main res equity which you will have cannot be used and you have looked at this. Your rental even if considered on your home is on the light side.

Income wise seems ok, you'll have issues on interest only based on what your intentions are so far.

Repayment mortgage requested by you.....and this is relatively straightforward. How old are you both because if you have to do repayment, the term will effect you d the payments massively.

getmore4less

If you were ever thinking of moving, paying of debt was not a good idea.

should have been gearing the BTL through low cost debt and getting tax relief on the rentals.

Renting your place is a bit of a risk gross yield 3.7% is far to low.

£80k rental is marginal on gross yield 5.25%
£75k rental is much better at 7.2%

Even if you sell yours at your estimated value you need £200k mortgage

New BTL debt won't be cheap but could raise over £100k but the rest(>£300k might be an issue at over 4x. with all the deposit coming from new debt.

given the costs of setting up all this a quick sale on your place might be a more atractive route giving renting it out will be lousy.

Why the hurry on this new place?

the_end_of_the_rainbow

Would take at least a month to get existing property on market (on holiday for 2 weeks then would need good tidy / de-clutter / touch up of paintwork / gardens tidying etc).

Just a thought, I have an overpayment reserve on my current mortgage of £93000 - could I release this and change loan to a 'let to buy'?. If I did this, would it be treated the same way as a BTL and not taken into consideration when considering new residential loan?

New property just reduced so now in our price- range. It's exactly the type of property we want and they very rarely come onto market.

getmore4less

You need to think about your priorities if you want this house.

How long has this place been on the market if it has just been reduced?


If planning to move on bargains you need finances in place BEFORE they come on tne market.

ACG

what your after isnt impossible, its definately something that could go ahead.

i would suggest a good mortgage broker for this as 3 searches on your credit file in quick succesion wont be a good thing. Get a good broker onto this and i think you stand a good chance of getting what you want, but i think you will need to discuss timescales and what you are prepared to do in order to look at different options.

more than we can look at on an open forum.

the_end_of_the_rainbow

Thanks to everyone who replied. Have spoken to L&C this morning and they are confident we can fund new house with a mixture of new residential / BTL and Let to Buy lending.