Is this do-able?

T-Sil

Hi all,

I have no idea if this is do-able, but here goes.

We have a 2 bed flat in greater london - about 50k equity.
We would like to move to a bigger house after having a baby and I am wondering if there is a way to keep the flat as an investment (switch to buy to let, or get consent to let) but also releasing the equity to use as a deposit for another house.

Hope someone in the know can advise

Thank You

kingstreet

You'd need to remortgage onto a let to buy product, possibly with a specialist lender. The mortgage would be no more than 75% of the value of the property, lower if the rental income would not be 125% of the monthly mortgage interest, assuming 6% pa.

T-Sil

Thanks for the quick reply

We are currently hovering about the 75% ltv mark, depending on valuations that we are getting done on Saturday.

So how does it work in terms of releasing the equity without selling the house?
So we have 174k left on the mortgage, so we remortgage that amount onto a BTL...then where does the outstanding money come from?

Thanks again

kingstreet

It doesn't.

If you only have 25% equity in the property you can't borrow any more of it.

The lender will want that as its "risk" cushion on a non-owner occupied property.

Letting the property only works for you if you can fund your deposit another way. In which case, you'd leave the mortgage as it is and ask your current lender for consent to let.

Let_Us_See

Agree. Your plan as outlined is a non-starter.