Is this right?

costingbunny_2

Hi
My partner owns his home outright and we are buying another home together. He wants to rent his house out and release around 40% of the equity in his home to pay towards the new house. His bank have said this is not possible. We thought that they would let him re-mortgage on a buy to let basis? Is there another way around this? We can get a mortgage on the new house but thought the buy to let idea was better as you are interest only and can offset the tax etc.
Thanks

Wh05apk

Yes this should be possible, but obviously not through his bank, see a proper broker.

Regardless of where the mortgage is secured, you would still be able to offset the interest to the value of the property when you first start renting.

kingstreet

Yet another example where the customer is given the impression that "we don't do it, so no-one else will, either" from a bank.

What you are trying to do is a straightforward transaction. It's a remortgage of an unencumbered property onto a let to buy, or buy to let product.

You should be able to borrow the lower of;-

- 75% of the value of the property
or
- the mortgage amount equivalent to a monthly rent which must be 125% of the monthly mortgage payment at an assumed rate of perhaps 6%.

You should be able to offset against tax, interest on a loan upto 100% of the value of the property at the date you start to let it, regardless of which property it is secured on. However, it is essential to get professional advice on this, as HMRC cannot always be relied on to apply the law as you would expect.

Many lenders offer such products (except the clowns you have spoken to so far) and a full view of the market can be obtained from a good whole market broker.