How much borrowing?

Phil_rich

Hi all,

We are looking into the options of borrowing additional money.

Basic outline, house owned worth £950,000 with a £350,000 mortgage. Looking to borrow an additional £450000 to purchase a second house for £450,000. Is it possible to joint the houses together to give an asset value of £1,400,000 thus making the LTV of 58% for the £800,000 borrowing.

Is it possible to borrow this Interest only?

Is it possible on a joint income of £85,000, based on such a large amount of equity?

Thanks for any help.
Phil

Thrugelmir

You'll struggle to get a much larger mortgage than you have already.

kingstreet

5x income is the most you'll get, net of credit commitments, childcare costs, maintenance of course. That means £425k is normally the maximum.

What happens to property one when you buy property two? Who will be living in it/them?

There are one or two smaller building societies who offer cross-charging facilities where they aggregate the lending to offer a combined LTV at a better rate, but TBH there's a lot more detail needed on this.

I suggest a good whole market or independent broker to see if this is feasible.

Phil_rich

Is there any way to release equity in property 1?

Property 1 is lived in by 2 families, 1 will move to property 2.

Thrugelmir

Phil_rich wrote: »

Is there any way to release equity in property 1?

Only by selling it.

What you are proposing is using the equity to secure a new loan. From a lenders view your income does not support repayment.

The fact that you are for interest only finance suggests that this is the case.

Phil_rich

New house may be rented out for an additional £15k per annum, minimum. This would take the income to £100k+. Also, the income mentioned is nett

dimbo61

£450K property rented out for £15K a year very poor return.

Thrugelmir

dimbo61 wrote: »

£450K property rented out for £15K a year very poor return.

At least double that amount.