budget for let to buy

want2bmortgage3

i am looking to let out my existing property and buy another one to live in.

i want to move my current mortgage to the new property, and then get a new buy to let mortgage for the existing one.

how can i work out what my budget is for the new property?

am i right that the max loan for my main mortgage is around 4x my gross income?

and that for a new buy to let i need 25% deposit and rent which covers 125% of the mortgage?

kingstreet

Will your current lender allow you a port from a remortgage?

Many only allow a port on a sale and purchase.

A let to buy product will probably top out at the lower of;-

75% loan to value
or
the mortgage based on rental income = 125% of monthly mortgage interest assuming 6%pa.

For your new residence, you can normally borrow upto 4x gross income, net of the cost of dependents, childcare, existing credit etc but some lenders will go as high as 5x. This depends on the term of the mortgage.

want2bmortgage3

thanks for that info, the rent income is good in the area and will easily cover the interest.

i was advised by the mortgage broker who set the first mortgage up that it could be transferred to another property, and they would also lend more on it in order for me to get more deposit for property 2.

kingstreet

You may be able to transfer the rate to a new mortgage on a new property, but the advisor may have thought you were talking about selling one property and buying another.

That's why I asked if your lender will allow a port on a remortgage, rather than a sale, as many won't.

An increase in your borrowings may be offered on one of the lender's current products and probably won't be granted on the current rate you are looking to port. The new mortgage (total amount needed) will be based on your current circumstances, income, affordability, valuation etc.

You can't transfer a mortgage from one property to another and porting does not guarantee you the next mortgage to port the rate to...

want2bmortgage3

I am just trying to work out a budget to look for a new property, it's not long before I'm out of a fixed deal on the current mortgage so could re-mortgage the existing property and get a new one on the new property.

Would I be correct in saying the following:
1. buy to let property value of £140k I can borrow £105k for this.
2. main residence, I can borrow £100k (4x income)
Therefore my budget would be £100k plus the difference in my mortgage balance now and my new mortgage of £105k? The other condition being that the £100k is no more than 80% of the new property value IE I have at least £25k deposit.

holly_hobby

Property no 1

Yes to remortgage onto a BTL product (whether this involves any equity release or not), you're typically looking at 75% as a first time landlord.

Rental income, as stated, must be at least 125% of rental income, if you use 6% as the calc figure, you'll know you will meet the criteria of all, inc those that actually use a lower payrate in their own assessment.

Property no 2

You want to port your existing mortgage product - as discussed this will be at the discrection of the lender.

But you may find the fact that you'll have a BTL mge commitment remaining on property no1 will affect affordabilty - as some lenders will ignore this commitment, whilst others will include it in their calcs for your new borrowings - so you may have to forfeit the porting and source a new product with an alternative lender in any event.

Have an hour with a mortgage broker, crunch some figs, see who'll offer you what and exclude the let unit (if self sufficient), and what your max borrowings will be for you new home, you can then assess if the exercise will be worth it.

Hope this helps

Holly