2 domestic mortgages??

pete50_2

Hi everyone

Just a quick question.I currently have a mortgage with nram which is approx 55k (£340) on a property.I have had the house on the market a while to sell but this is impossible due to a massive nosedive of the area,as such the house is in negative equity.I am now looking to let this house out for approx 440-450 pm and move to a better area and have managed to save a 10% (12k) deposit for a house (the ones ive looked at are about 115-120k).Can i still get another domestic mortage with another lender to move to another house or does the first mortgage have to be converted to a BTL? or can i continue this mortgage with nrams consent and get another mortgage with another lender? I have no other debt and have an income of 38-40k per annum.

Any Help appreciated
Pete

kingstreet

The two issues are separate.

You need to ask NRAM for consent to let for the current property and mortgage.

You can apply for another mortgage on a new property as long as you have sufficient deposit to satisfy the lender's criteria. It may ignore the let property in the background, it may "tax" you the monthly payments off your income, just in case of "voids" with no tenant, or it may deduct the capital amount of the mortgage off your borrowing power. The treatment varies from lender to lender.

Nationwide, as an example says;-

Where your client will own more than one property on completion of their new loan with Nationwide the maximum LTV is 85%. Purchase applications for these clients should be keyed as a Second Property to ensure the correct LTV limit is applied.

For information about products please see our products, loan size and maximum LTV criteria. If your client owns more than one property, we require all addresses and mortgage details.

Let properties are treated as self-financing where the rent received is at least 125% of the current mortgage payments. Where let properties are mortgage free a percentage of the total monthly rent received will be treated as income. Rent must have been received for a minimum of one month at the point the application was submitted and we will require up to date bank statements to confirm this. A copy of the signed tenancy agreement is required.

Which, in most cases, is why you wouldn't go to Nationwide in such circumstances.

michaels

So in general, you could be living in a property 1, get consent to let on resi mortgage (if the lender permits this) and then buy a second property 2 with another resi mortgage, move in to property 2 and rent out property 1?

Any suggestions on lenders for this scenario? Property 1 will obviously not be let when mortgage 2 is drawn down so how will they asses what the rental income on property 1 will be?

kingstreet

michaels wrote: »

So in general, you could be living in a property 1, get consent to let on resi mortgage (if the lender permits this) and then buy a second property 2 with another resi mortgage, move in to property 2 and rent out property 1?

Yes.

Any suggestions on lenders for this scenario? Property 1 will obviously not be let when mortgage 2 is drawn down so how will they asses what the rental income on property 1 will be?

The best lender will depend on the combination of circumstances which form your financial make-up. Deposit and amount of rental income being the main two.

Normally, the lender will accept a rental valuation by a ARLA registered letting agent.