Can we get another mortgage?

unhappy_shopper

I am seeking the opinion of mortgage advisers and other experts on the following situation:

House 1: W00lwich 20% LTV CTL but not yet let
House 2: W00lwich 50% LTV present home

Now since there is a new job in the horizon which will mean a hour and a half commute each way we are thinking of buying another one nearer work. Assuming affordability is not an issue,
1. Can we therefore take a BTL mortgage for #1 to finance (deposit) the new purchase?
2. What are the chances of being granted a mortgage for #3 when one of us is having a new job, permanent and without any probationary period but applying for the mortgage within a month or 2 after taking up the job?
3. Will it be an issue if we apply for a new mortgage soon after the BTL mortgage is through?
4. Does W00lwich approve a 3rd mortgage?

Thanks in advance for your kind replies.

holly_hobby

unhappy_shopper wrote: »

I am seeking the opinion of mortgage advisers and other experts on the following situation:

House 1: W00lwich 20% LTV CTL but not yet let
House 2: W00lwich 50% LTV present home

Now since there is a new job in the horizon which will mean a hour and a half commute each way we are thinking of buying another one nearer work. Assuming affordability is not an issue,

1. Can we therefore take a BTL mortgage for #1 to finance (deposit) the new purchase?

Yes, you could seek a BTL remortgage (utilise a broker for the best deals) to release equity to fund your next purchase - however without an tenant how will this be funded ? (which is a Q the lender will ask, if no tenant lined up for completion).

Minimum rental income 125% of mge interest (typically using 6%, unless a lower priced medium to longterm fixed rate is selected), to demonstrate the property's self sufficiency.

Associted mge interest of the original loan & equity release eleement, will be a tax deductable expense from rental income, as it is classed as capital withdrawal. (however this is will be capped for later equity release exercises, at a mge equalt to the value of the property when it entered commerical let i.e you switched it onto CTL).

unhappy_shopper wrote: »

2. What are the chances of being granted a mortgage for #3 when one of us is having a new job, permanent and without any probationary period but applying for the mortgage within a month or 2 after taking up the job?

As long as the income meets affordability checks, the role is permament (wout any probationary as you say), and your credit history is ok, shouldn't affect.

unhappy_shopper wrote: »

3. Will it be an issue if we apply for a new mortgage soon after the BTL mortgage is through?

No as BTL is essentially commerical lending, however some lenders may want to take into account the existing mges (BTL/CTL), into their affordability matrix (and will def do so if there are no tenants !).

Others will set aside (ignore) if self sufficient, with AST tenancy histrory/tenant lined up.

You may also find that your new resi mge will be assessed under 2nd property regs, with a restricted max LTV circa 85%(although I would expect that you will be able to take account for this in your equity release exercise on property no 1)

unhappy_shopper wrote: »

4. Does W00lwich approve a 3rd mortgage?

If you remortgage no1 away from them, and they agree to CTL on your 2nd property, then yes possibly - although they may have concerns on exposure, depending upon the figs involved.

If you want to keep prop no 1 and no 2 with them, doubtful given as I say the extended exposure they'd incur.

Hope this helps

Holly

unhappy_shopper

Thanks a lot holly hobby for your advice and guidance.

The only issue is that we are not selling #2 yet as #3 is going to be a Mon-Fri residence to reduce the tedium of commuting.

I think our plan of action is

1. find an alternate BTL mortgage for #1 and a tenant ASAP. Hopefully we will be able to do that soon.

2. Then we can concentrate on doing our sums (just to assure ourselves that #3 is affordable before approaching a lender/broker) keeping #1 out of the picture as it will then be a BTL. Your assurance that a new job shouldn't affect our chances for mortgage is very useful.

Thanks again. :T :T

holly_hobby

New job, if as you say its permanent (ie not a zero hrs contract), with no probationary period - then as long as income is sufficient to service your exitsing commitments (ie mge on prop no 2 as it won't be let), and the new mge (ie mge on prop no 3) - you'll be ok.

As prop no 2 won't be let, you will def be assessed under 2nd property criteria.

I do think given the various issues, engaging a broker to facilitate your new BTL and resi mge, would be the simplest and quickest route.

Hope this helps

Holly x

unhappy_shopper

Thanks HH, will do as you suggested - see a mortgage broker so that all this reorganisation can be done in an organised manner

unhappy_shopper

I have talked to a fee-free whole-of-market broker and given a list of suitable BTL products. But the arrangement fee & ERC for most of them are scary :eek: The broker was not able to answer my following query properly. So, I am posting my question here. You have my thanks in advance for your answers

If I take up a 2-year fixed product and next year one of our sons need to move to that place (it is very near a Russel Group Uni) and live there, do I have to switch to a residential mortgage and pay ERC? Or can I continue with the same BTL product, but no offsetting the mortgage interest against rental income (none in that situation - though I'll save on his residence hall fees) and thereby avoid paying hefty ERC? TIA.

kingstreet

If your circumstances change, you can do what you want. You can live in it yourself, let it to a relative, whatever.

It is only your intent at the outset which determines which route you take.

If you intend to let it to strangers, get a standard BTL product.

If you intend to let to a relative, get a regulated BTL product.

If you are buying a second property which will be occupied by a relative, get the appropriate residential mortgage.

unhappy_shopper

Thanks for your advice, KS :beer::T

It is just that I am trying to look ahead regarding the BTL mortgage. Our current intention is to let it out through a letting agent. We won't know until January (when UCAS offers arrive) as to whether there will be a need for our earlier home as accommodation for our children.

So, what you are saying is that I can get a BTL product and change occupants of that home midway through the lifetime of that product Thanks :T

kingstreet

Yes. You are not stuck with something. You are paying a premium for a BTL with strangers occupying. If you, or a relative later occupies, the lender continues to get the risk premium of the higher rate, but the increased risk is gone.

Ergo, you may wish to remortgage elsewhere if that happens.

unhappy_shopper

A question for the mortgage advisers who frequent this forum:

Is this BTL mortgage available only through whole-of-market mortgage brokers? Can I remortgage to this product from a current residential mortgage?

Thanks for your replies.

amnblog

it is a broker product. Yes you can remortgage to it.