2nd mortgage advice

pasty45

Hi all
Wondering if anyone could advise me. I own a small flat, worth about 170k and mortgage is around 110k. I want to move to somewhere bigger, in the region of 240k. Income is around 46k (plus 8k bonus = 54k - not sure if banks count bonus?). My credit history is good.

The plan was to simply sell up and move on, although the market is very poor and not finding buyer, so now wondering if it would be possible to rent out my existing place (could get £800 a month) and take out a new/second mortgage to buy a second place for around 240k. Obviously I would need to free up some of the equity on my current flat to use as a deposit for new place.

Sorry but I have no idea how feasible this is and whether banks would agree to this. Any help would be really appreciated!

Thrugelmir

Some lenders will decline on basis of source of deposit, i.e. released equity.

Have you reduced your asking price by much on your current property?

grey_gym_sock

the numbers look a bit shaky ... if you remortgage current flat as BTL, i think you can only go up to 75% LTV, which wouldn't quite give you enough for a 10% deposit on the new place.

pasty45

Yes reduced from 170 to 160 but not much difference, don't want to go any lower though.
Might be a silliy question, but If I were to remortgage current place now and free up 30k of equity, how would second lender know where that money had come from?

pasty45

Thanks grey gym sock, I think you're right I probably need to pay off another 10-15k before I go down this route (unless I want to pay massive interest).

Thrugelmir

pasty45 wrote: »

Might be a silliy question, but If I were to remortgage current place now and free up 30k of equity, how would second lender know where that money had come from?

Your credit file.

As the remortgage will be recorded.

holly_hobby

As a first time landlord you will be restricted to 75% LTV, with rental income at 125% of mge (which can be fully interest only), use 6% for ballpark calcs.

Based on current figs, its pointless going any further into this, until the figs stack up a bit more - although releasing equity from your prev property shouldn't cause any issues for your next pch, if its demonstrated as being self sufficient mge v rental income wise.

When the times right, sit with a whole of market mge broker, whom will steer you in the right direction re your BTL and residental mge requirements, whilst supporting you throughout the application process and beyond.

Hope this helps

Holly

pasty45

Thanks Holly, will carry on trying to sell it for now!

Dave_Ham

Selling is always going to be the most suitable option here, given the numbers but I take your point regarding selling in a repressed market.

May be worth a trip to a decent broker, as there may be some bits to attack depending upon the details I would not rule it out of hand that you cannot achieve what you want.

Would all depend on the the detail though..

All the best