new mortgage

pete50_2

Hi everyone
quick question if anyone can help,does having a mortgage on a property you're going to let out affect the amount of deposit needed on a new residential mortgage?

with thanks

Pete

kingstreet

Probably.

For example, Nationwide will only lend upto 85% on a new residential property when you let the current one. From its critieria, as an example;-

Clients with Additional Properties

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.

In addition to LTV restrictions, you'll also find some lenders won't simply ignore the existing mortgage, they'll tax your income with the cost of the mortgage as if you had no tenant, and yet others may deduct the capital value of the outstanding mortgage from what you can borrow for a new home.