Equity release for a buy to let

sidthekid

Hello and thankyou for any advice given.
I am seeing a mortgage advisor on Saturday and would like some advice first so I don't get bamboozled in the meeting.
My question is this, I have a 2 bed flat which I brought for 238,000 and have a 158,000 mortgage. I had the flat valued with the notion of selling it and buying a 3 bedroom house (it was valued at 270,000), now I mentioned to the estate agent that my ideal situation would be to keep the flat to rent out and buy a house also, but I don't have a deposit for the house. She said about taking out some equity from the flat for the house deposit. Could some please explain if this is possible and how much money I could get out for a deposit? ie. 238,000 - 158,000 = 80,000 deposit or 270,000 -158,000 = 112000.
Is this possible and what type of mortgages would they be ie. buy to let and a normal mortgage?
Thankyou.

kingstreet

You'd remortgage to a let to buy product on the flat.

You can normally borrow upto 75% of the value of the property, but the rent must be at least 125% of the monthly mortgage interest, assuming 6%pa or thereabouts.

Once the current mortgage is repaid, the residue can be used as your deposit for the new main residence.

Typically, you'll need a new lender which ignores the mortgage on the let property as being "self-funding" as many lenders will "tax" you the monthly mortgage payment, before working out how much you can borrow for your new home.

dimbo61

You cannot borrow 100% of the equity from your current flat!
Forget the £270K that is hot air as far as any lender would be concerned so £250K at most ( quick sale if needed)
10% is £25K so 70% is £175K so you might get £17K out to put down on the next house.
You will have fees to pay so I think this is a none starter

sidthekid

Thanks for the advice, looks like it's a non starter then.