Ok Im kinda new to mortgages so in need of a little advice

KBurns

Okay so if i have posted this in the wrong place sorry.

So basically this is my situation - I bought a Fix-a-upper House for 52,000 just under two years ago. It is only a two bedroom end terrace and in light of recent news we need to upsize to an extra bedroom. I recently had it valued at £80,000 and put it on the market, but after 4 weeks not even as much of a viewing, disappointed but not distraught as there is potential to expand the living space if necessary. But that's not what I'm here to ask.

What i need advice on is;
I'm considering remortgaging as I'm at the end of my time with the current deal, but will be asking the mortgage company to come and revalue the property - understanding that they will be more conservative with a valuation then an estate agent. Then use the equity that I generate from it to;
a) pay off a few loans and
b) towards a deposit on a new home

and renting the current house out (been told by agent that it will be 425pcm which should cover the new mortgage). Am i missing anything glaringly obvious to anyone in this industry that i should be aware of??

Thanks in advance
Karl

ACG

Be careful when fixing in to a new deal. If your intention is to rent the property you need to ensure the lender will give consent to let.

If not, then you could be tied in and have to pay early repayment charges in order to get a Buy to Let (BTL) mortgage.

Alternatively you could stick on the SVR until the time comes and go straight for a BTL. But be prepared that BTL mortgages are typically at a higher rate than a normal residential mortgage... although you can put it on interest only if you wish.

holly_hobby

You do realise that you can't get a 100% mge - so you can't release all your equity.

Additionally, if post equity release, you don't obtain consent to let (which lenders can and do refuse), your max LTV on a formal BTL arrangment, and as a first time landlord, is typically 75%, with rental income 125% of the mge interest (generally assessed on 6% if the loan is not on a medium to long term fixed rate).

Hope this helps

Holly

Yorkie1

Have you read up on all that being a LL entails?

Don't forget to budget for income over only 10 months per year (gives you a buffer for voids), also LL's insurance / gas safety certificate / maintenance etc.

Also tax on the income.

And letting agent fees if you use them.

Have a look at this useful thread:
http://forums.moneysavingexpert.com/showpost.php?p=41160642&postcount=12

hcb42

don't remortgage at this time with all this uncertainty, as you dont want to be locked in - and remortgaging to pay off debts isnt considered wise either, you are spreading that debt over a much longer term..

kingstreet

If an EA "valued" it at £80k and you've had no interest, I suspect the real value is around £68k. A surveyor valuing for a mortgage lender will look at the sale of similar property in the area within 0.5 miles in the last 120 days - comparables, they are called, using a site like this;-

http://www.rightmove.co.uk/house-prices.html/svr/3112;jsessionid=A3C1796015ACBA792D402264642C9D68

which displays Land Registry data.

If your house is worth £68k and you want to do a let to buy to raise funds, the maximum you will be able borrow will be 75% of that, £51,000.

How big is your outstanding mortgage?