Second mortgage...?

Boobie

Ok, a little background to attempt to make myself clear...please bear with me
About 5 years ago I moved a few hours away from home for work with the intention of returning in a few years with some experience in my industry which would enable me to get a job back at home. I immediately started saving on starting work for a deposit on a house.
About 3 years ago I purchased a house near home, thinking it was a good time to buy and with the intention of returning home fairly soon.
I was happy enough that I could get someone in to rent it and cover the mortgage until I made it down home...and I did(she's still there).
The problem I now find myself in is that I'm now quite settled where I'm working and don't see myself moving home in the immediate future.
I have the guts of another deposit saved and I'm wondering what the chances are of me being able to get a second mortgage on somewhere near work. My current rent is not much less than what I would be paying(per month) mortgage wise.
Is my only option to sell the house I bought down home? The rent down there is covering the mortgage and it seems to me like a good long term investment but it has to be prohibitive to me getting another mortgage?
In terms of numbers I have about 60k left on the first mortgage with the rental income covering the repayments plus about 10%...although this is a tracker mortgage so will increase marginally whenever the base rate rises. The second mortgage would be for ~100k and I'm earning about ~35k gross.
Sorry, lots of info there I know, but any opinions would be welcome. I'm loathe to continue throwing rent money away, or to sell what seems like a decent investment but I'm also wary of gaining too much debt if I would even be allowed to take out another mortgage anyway.

ACG

This is complicated to explain on a forum - although assuming the numbers stack up it should be easy enough to re-organise.

The current property you own... assuming there is 25% equity in it, you can put it on a BTL mortgage - and on interest only if you wish.

A new property with the current property on a BTL should not be an issue. You dont say what your deposit is but assuming its atleast 10% then there should be no major problems.

I would suggest sitting down with a broker as there could be a few ways to do it, but as i said assuming the numbers stack up it should all be possible without too many issues.

Foxy-Stoat_3

If your tenant has been there for 3 years and still paying then I would try and avoid selling that place. Would of thought that the BTL you have is self sufficient, at the moment.

If you have 10-15% saved for a deposit I would speak to a broker and get cracking!

Boobie

Thanks for the replies guys.
My current rental agreement ends in 6 months so I should really have a chat with a broker and work out my options fairly quickly.
Just wanted to check I wouldn't be laughed out the door!

ACG

That wont happen.

The only time that happens is if your a taxi driver earning £8k a year (or whatever the tax free amount is) and you want to borrow £200k.

Boobie

Another quick question on this. I've read that a BTL mortgage will be slightly more expensive...what if this results in the rent not quite covering the repayments? I've read lenders like to see a % buffer to approve a BTL?
Secondly, this may be a stupid question, if I have this as a BTL is there anyway I can borrow against it on top of my deposit? To possibly lower my LTV % on a potential new mortgage?

ACG

Yes, thats one of the things i was thinking of when looking at it.

With regards to the buffer. Most lenders want to see the rental payments to be 125% of the monthly repayments (which can be on interest only) based on an interest rate of 5%. Some lenders may be a little more rleaxed than that but not by a huge amount.

Boobie

Again thanks for the info. Just trying figure out my options are at this point.
Will talk to a local broker in the new year and explain my position and hopefully they can point me in the right decision.

ACG

Without knowing the figures its difficult to say but you could potentially look at just doing a mortgage as you have a deposit in place. Alternatively it may be financially better to use the existing property to obtain a better residential mortgage...

If you get a decent enough broker (try to avoid estate agent based brokers), im sure they will do the research needed to find you something that works for you.