Mortgage for 2nd house

getmeoutofhere

I'm mortgage & debt free, and thinking of purchasing a 2nd property to help with future security and an alternative to risking money in pensions etc.

Obviously the new property would need to be rented out to help fund this, but the 25% deposit for a buy-to-let mortgage seriously restricts my budget.

Is there any advice or options people can suggest out there, for example could I purchase the new place on say a 10% deposit and rent have the option to out my current house to avoid the buy-to-let scenario?

dtaylor84

I'm in a similar situation and have considered doing something like that.

But as I understand it, if you did as you suggested (bought a new house with mortgage, then rented out the old house owned outright) you'd be unable to claim tax relief on your mortgage interest payments, which you could if you had a mortgage on the rental property.

mail2z

With the intrest rate so low right now, re-mortgaged your current property just enough to raise the deposit and find a BTL mortgage with highest LTV. Interest on your BTL will be deducted from the rent for capital gains purposes. Any profits can pay for your re-mortage.

BTL is not for everyone just exercise lot of care before you jump to the decision. Your BTL should return sufficient yield for this to work.

getmeoutofhere

Thanks for the replies, I'll research further

ViolaLass

As I understand it, you can still claim the tax relief even if you live in the property that has been mortgaged. What matters is the reason for which the mortgage was taken out, not on which property it's secured. We've got a BTL but mortgage on our house.