New house - BTL mortgage rather than sell existing?

d4v34

Hi, my partner and I are looking to purchase a new larger property and we're thinking of a slightly different way to fund it.

We have an existing property which has no outstanding mortgage at all.
To fund the new property we would look to get a standard interest only or repayment mortgage but rather than selling the existing property is it possible/practical to release the equity as a BTL mortgage?
This way we could fund the new property but still hold on to the existing property either as an ongoing BTL or if later we decide BTL isn't for us sell it and pay the BTL mortgage off completely.
It also means that if completion on the new property is earlier than expected we don't have a problem if the house hasn't sold at that point.
It does mean having two mortgages and having to cover any void periods with the BTL but we can accomodate that and the figures do look to be workable.
Do you think lenders would think this acceptable?

Thanks for any feedback

ACG

Sounds fine, i cant see any issues there its done all the time.

A few things to note:
- Expected rent usually needs to be 125% of the monthly repayments.
- You can only remortgage upto around 75% LTV on the property your securing your mortgage against.
- You cant live in the property with the BTL mortgage secured against it.

Thrugelmir

In no particular order.

Is letting the property a viable proposition, i.e. profitable?

With a tenant in situ, not easy to sell a property, as tenants have rights with regards to access for viewings etc. When you come to sell there will a void rental period. While the property is empty.

How much equity do you wish to release?

Do you have the deposit for a new property?

What LTV is the new mortgage?

d4v34

ACG wrote: »

Sounds fine, i cant see any issues there its done all the time.

A few things to note:
- Expected rent usually needs to be 125% of the monthly repayments.
- You can only remortgage upto around 75% LTV on the property your securing your mortgage against.
- You cant live in the property with the BTL mortgage secured against it.

That's great ACG, thanks very much.

d4v34

Thrugelmir wrote: »

In no particular order.

Is letting the property a viable proposition, i.e. profitable?

With a tenant in situ, not easy to sell a property, as tenants have rights with regards to access for viewings etc. When you come to sell there will a void rental period. While the property is empty.

How much equity do you wish to release?

Do you have the deposit for a new property?

What LTV is the new mortgage?

Hi Thrugelmir,
Interesting point about the tenant, if we did want to sell then I'm confident we could cover the void period.

If we took the 75% LTV amount on the BTL mortgage that would enable us to have a reasonable mortgage on the new property. Arragement fees for both mortgages is also something we'd have to take into account.

The monthly rental is more than 125% of the monthly repayment.

Deposit and stamp duty is accounted for.

With savings and the BTL mortgage funds the LTV on the new property would be about 40%

Thanks