My idea - Will it work?

argomatt

Hi :j

I need a bit of advice / reassurance that my idea is workable, or not.


I have one flat which I let after I moved out (value £130,000. mortgage £600. rental income £600 pcm).

I have another flat where I currently live (value £115,000. Mortgage £85,000. possible rental income £550 pcm).

I would like to move to a bigger house as we are anticipating starting a family in the next couple of years, but would like to keep both flats as investments.

I don't have much in the way of savings because I have been concentrating on paying down the mortgages. I can borrow back overpayments on mortgage 1.

Would it be possible to:
Borrow back overpayments to fund a house deposit of £50,000
Get a new mortgage (75% LTV) for the new house?

Would a mainstream lender be able to do this or would I be restricted to specialist lenders?

Sorry for the long post - situation a bit complicated.

:beer:

kingstreet

Can't say anything about your borrow-back prospects. You say it's possible with your existing lender, so one for you to tell us...

A 75% residential mortgage with two self-sufficient let properties/mortgages in the background?

Should be straightforward if credit history and income/affordability are alright.

Let_Us_See

Are both your existing mortgages on a BTL basis, or only the former?

argomatt

Thanks for the responses;

@Kingstreet; the problem I forsee is that before I can get tennants in to property 2, I first need to move out. And to be able to move out I will have to have bought the new house. So initially there will be 1 self sufficient property, and one waiting to be let.

@Let Us See; Neither mortgage was taken out on a BTL basis. I have Consent To Let on mortgage 1, and as I understand it should not have trouble getting Consent To Let on mortgage 2 when the time comes.

Thanks again

kingstreet

Ok.

Perhaps I should have said "presumed to be self-sufficient," and this may be evidenced by the production of a letter from an ARLA registered letting agent, or by provision of a tenancy agreement to start from the date of completion.

If you would have used a lender which will only accept it if the property is already let, find another one, or use a broker.

You'll need to discuss the finer detail with whomever you decide to place your business.

Let_Us_See

If you are assuming obtaining another CTL on your second property and this is integral to your proposed purchase then I would get cracking on the CTL request. Personally, I think a second CTL will be difficult to achieve.

nick100*2007

How much do you owe on each property?

argomatt

@nick100*2007

At present I owe £600 on the mortgage on the one I have got let and £85000 on the mortgage on the one where I live now.

If I am able to, I would increase the borrowing on the first mortgage to around £50000 to provide the deposit for the new house.

Thanks for your help

Gary123456790

With 2 let properties you are starting to look like an intentional landlord and not someone who should be granted CTL.

Even if you get CTL on the second one, what if they end this (it is usually reviewed every few years) and force you to look at BTL mortgages with higher fees and interest rates?

Will the numbers still stack up?

Gary.

argomatt

Thanks Gary,
I hadn't realised the distinction between being an intentional landlord and having a consent to let.
I will have to look further into that. Maybe the idea won't work and I will have to sell one or other.

Thrugelmir

Who are your current lenders?