What to do???

Houses_buying_help

Please help looking at buying a new house already have one from different stage in my life that I rent out on a variable mortgage at a rate of 3.99%. Now wanting to buy seen two mortgage advisers one felt that I should just put down 15% deposit and get a new fixed rate mortgage at 4.35% and leave my first mortgage alone. Second said would be better to borrow against first mortgage get bigger deposit so can get better fixed new deal at 3.28%. Please help if you can.

kingstreet

It's opinion.

Route one is simple. You need to ask the current lender for consent to let, then you do your new mortgage on your new purchase. Many lenders will ignore the let property/mortgage in the background but you may find you can borrow only 80% to 85% as their maximum LTV is lower for a second property.

To go route two, you would have to remortgage property one onto a formal LTB/BTL product, meeting the necessary costs/fees and accept the rate on offer for your loan to value. This may allow you to borrow enough to buy the new property, or provide a big enough deposit that you van get one of the best mortgage deals, for those looking for less than 60%.

You may wish to change the mortgage on the let to interest-only, which is also possible via route two.

Check the second adviser's motivation. Will they charge more for two mortgages? How much? Do the other costs and fees outweigh the interest rate saving?

Houses_buying_help

Thank you for your help not sure if it was because I am being taxed on rent from house one and he felt that if my mortgage was more that would make up the difference will check it out. Really helpful thanks

kingstreet

You need to take professional advice (accountant, tax specialist, not mortgage broker!) on taxation issues, but in principle, HMRC is more interested in how you use the money you raise, rather than how it is secured.

Therefore, you should not assume money raised on your own home will not be an allowable expense, while the mortgage on the let property will.

Houses_buying_help

Will do thanks again.