..... I have a cunning plan!!!

Kabby50

Hi all just going to run this past ya...
Trying to help my son get a foot on the housing ladder, I have a plan... I currently let out a property that's worth approx 115k
The monthly rent is £650 and the tenants have been in situ for eighteen months. The outstanding mortgage is £35k and it is residential mortgage with letting permission from the lender
I an thinking if remortgaging to a buy to let mortgage for an extra 50k making a total 85k and giving the 50k to my son as a deposit...
Does anyone think there would be problems doing this? Or indeed any advice about maybe doing it in a different way...
Thanks all in advance

Thrugelmir

There's no certainty that your existing lender will allow you to withdraw equity.

Crashandburn

Thrugelmir wrote: »

There's no certainty that your existing lender will allow you to withdraw equity.

Answering before reading again?:)



If switching to a Buy to Let, then there would seem nothing wrong in the logic. Just check that the purpose of the capital raising fits on their criteria. The rest of the figures would fit most buy to let lenders.

Only issue might be getting the value up to the £115k as you are sitting on the limit of the 75% deals but if this doesn't quite stack up on figures, then you just reduce the amount you take out

Kabby50

Thanks "crash" appreciate you taking the time to reply
I'm hoping my plan will work as the sums seem ok
Just out of interest I wonder when you remortgage with a new lender how they "check" what you are going to do with the funds left over after they have redeemed your original mortgage?
Do they just deposit into tour Bank Account?
Any advice appreciated

Thrugelmir

Crashandburn wrote: »

Answering before reading again?:)

No.

I an thinking if remortgaging to a buy to let mortgage for an extra 50k

Property is no longer a guaranteed ATM machine. Times have moved on.

Kabby50

Thank you Thrugel...I appreciate your reply
I understand what your saying times have changed and it's harder to remortgage. I just thought doing my own loose sums I may come in under the bar
Ie 85k on a property I guessed was worth 120k is just a touch over 70% LTV but if the lenders are mean with their valuations I
May have to revise my borrowings..
Also, £650 a month income to cover a 85k mortgage@5% interest only=roughly)350 a month well over the usual criteria of 130% of the mortgage payment

It worked for me, il put in to practice and see how it goes

Crashandburn

Thrugelmir wrote: »

No.
Property is no longer a guaranteed ATM machine. Times have moved on.

Fully understand this. It's just you mentioned about going back to the existing lender in your first post when the plan was to go from resi mortgage onto a buy to let ie completely new set up and no indication that the OP was staying with the existing lender, or indeed they do buy to lets.

As for the purpose of the extra money, most don't list the gift to family as a deposit for a property as an acceptable purpose but then again, then don't mention it as a unacceptable purpose!

As long as its not capital raising for business or
speculative purposes, then I cannot see an issue with it. Just make it clear on the application.

kingstreet

Kabby50 wrote: »

Thank you Thrugel...I appreciate your reply
I understand what your saying times have changed and it's harder to remortgage. I just thought doing my own loose sums I may come in under the bar
Ie 85k on a property I guessed was worth 120k is just a touch over 70% LTV but if the lenders are mean with their valuations I
May have to revise my borrowings..
Also, £650 a month income to cover a 85k mortgage@5% interest only=roughly)350 a month well over the usual criteria of 130% of the mortgage payment

It worked for me, il put in to practice and see how it goes

If you work on the lower of;-

- 75% of the value of the property
and
- rental income to be 125% of monthly mortgage interest at 6%pa

you should be fine. This covers most of the BTL lenders I can think of.

75% of £115k = £86,250
and
£650 / 125% = £520 x 12 = £6,240 / 6% = £104,000

So, 75% is the lower figure and should be achievable.

Thrugelmir

Crashandburn wrote: »

Fully understand this. It's just you mentioned about going back to the existing lender in your first post when the plan was to go from resi mortgage onto a buy to let ie completely new set up and no indication that the OP was staying with the existing lender, or indeed they do buy to lets.

As for the purpose of the extra money, most don't list the gift to family as a deposit for a property as an acceptable purpose but then again, then don't mention it as a unacceptable purpose!

As long as its not capital raising for business or
speculative purposes, then I cannot see an issue with it. Just make it clear on the application.

Are you a mortgage broker? If so you should amend your signature.

Thrugelmir

Crashandburn wrote: »

As for the purpose of the extra money, most don't list the gift to family as a deposit for a property as an acceptable purpose but then again, then don't mention it as a unacceptable purpose!

As long as its not capital raising for business or
speculative purposes, then I cannot see an issue with it. Just make it clear on the application.

Entirely at the discretion of the individual lender at the time of application.

then I cannot see an issue with it

The answer to this has no relevance to this individual poster as such. A far wider issue that will be addressed in the decade to come by the largest finance houses.

Crashandburn

Thrugelmir wrote: »

Are you a mortgage broker? If so you should amend your signature.

No. But then again, you don't have to put the signature on the profile if you don't want to.