Purchasing a second property.......Help

R999SEY

Hi, I need some advice. I currently own my own home valued at £105-110k. It is in my name and I have a mortgage of £76k on the property. My fixed rate deal is up in Jan 2015

I have consent to let from the lender on the property to rent it but the rent is £550 a month and my repayments are £578 (which is fine).

I am now pregnant and want to move back to home with my OH ( we currently rent away due to work)

However we have no deposit, I would like to use some equity from my house above to purchase a property at £170k (this is well within our borrowing value with joint salaries) we would be looking at borrowing £153k on new mortgage and £17k from other property for deposit

Can any one tell me if I can do this?
How I can do this?
And whether I need to change original property to BTL?
Can I change to BTL and loan against property?

Thanks
R999SEY

ognum

I don't think your plans are possible for a few reasons I will name a few I am sure others will mention others.

Your current house has about 25% LTV and that would be what most lenders would require for a BTL mortgage.

You are paying tax on your rental income aren't you? If you are a lower rate tax payer then you will loose 20% of your rental income on tax! The sums don't work out so well like that!

What will happen if you have voids or your tenants don't pay the rent, can you afford the mortgage + council tax+ utilities on the house while you have no income from it?

I think you will be cutting hings fine to buy another house but it is of course your choice!

ACG

Can any one tell me if I can do this? This isnt going to be easy to do. Your current lender wont allow you to borrow more on consent to let and you will struggle to get a BTL above 75% LTV (i only know 1 or 2 lenders who will do it at 80% but the rent needs to be 125% of the mortgage repayments... which means your not going to be able to get a BTL).
How I can do this? The only way i can see you being able to do this is to get a secured loan against against property 1, but then this will affect your affordability... your income will need to be able to afford the loan and the new mortgage.
And whether I need to change original property to BTL? You might be able to get away with either but without knowing more info its difficult to say.
Can I change to BTL and loan against property? Possibly yes.

I would personally sit down with a broker but i think you might find this very difficult to place.

R999SEY

Thanks for the responses, we could look at remortgaging on the first house and finding the rest of the deposit from parents.

Would I be able to be named on two residential mortgages if it is with two different lenders?

We would be in a position to pay both mortgages etc if we had no tenant in first property?

Also can anyone tell me the rules around taking a mortgage out whilst pregnant? Does it have to be sorted prior to maternity leave etc?

Thanks

R999SEY

Excited13

Is there any reason why you can't sell or move back into property one? I think the other posters have pointed out the issues with your original idea.

Whilst you can afford it now you will be going down to maternity pay so what would you do if the other property was empty?

I really don't want to put a downer on a really exciting time please carefully consider before taking on another property.

ognum

R999SEY wrote: »

Thanks for the responses, we could look at remortgaging on the first house and finding the rest of the deposit from parents.

Would I be able to be named on two residential mortgages if it is with two different lenders?

We would be in a position to pay both mortgages etc if we had no tenant in first property?

Also can anyone tell me the rules around taking a mortgage out whilst pregnant? Does it have to be sorted prior to maternity leave etc?

Thanks

R999SEY

You have not replied to the paying tax on your rental income thus reducing you rent. Do you do this?

R999SEY

Excited13 wrote: »

Is there any reason why you can't sell or move back into property one? I think the other posters have pointed out the issues with your original idea.

Whilst you can afford it now you will be going down to maternity pay so what would you do if the other property was empty?

I really don't want to put a downer on a really exciting time please carefully consider before taking on another property.

We have considered moving back to property one but it is a bit smaller than we would prefer and would like to keep to properties if we can. It's not desperate that we have a second property we were just exploring the options of having two houses. We can go to property one if needed.

Thanks
R999SEY

R999SEY

ognum wrote: »

You have not replied to the paying tax on your rental income thus reducing you rent. Do you do this?

I have only been renting the property for 6 moths and my management company do the tax return so I haven't seen the numbers yet.

As I don't make profit on the rental I am hoping it won't be too high? In terms of tax rate I am a 40% tax rate payer

Thanks

R999SEY

Werdnal

You are only permitted to deduct the INTEREST on any mortgage payments from your rental income, so you may be making more profit that you think!

Just because you don't actually cover the mortgage payments with the rental amount, its what the mortgage payment covers that counts.

ognum

R999SEY wrote: »

I have only been renting the property for 6 moths and my management company do the tax return so I haven't seen the numbers yet.

As I don't make profit on the rental I am hoping it won't be too high? In terms of tax rate I am a 40% tax rate payer

Thanks

R999SEY

I am sorry but I think you are confused, you need to do self certification for your rental income. If you have been renting for 6 months you will need to declare your income for the part up to April 2013 by January 2014.

Your management company cannot do your tax return!

R999SEY

ognum wrote: »

I am sorry but I think you are confused, you need to do self certification for your rental income. If you have been renting for 6 months you will need to declare your income for the part up to April 2013 by January 2014.

Your management company cannot do your tax return!

Thanks ognum but my management company are accountants and financial advisers so for a fee they do the return and I meant this is my first 6 month rental period so we have only had the house rented since April this year

R999SEY