Mortgage for a second property - Need info and advice

goodmorningsunshine

I bought my first (and only) property 2 yrs 1 mth ago, and am considering buying a second property either myself or with someone else who also has a mortgage on their home.

How would mortgage companies view this, how does it work, and most important would I/We get a second mortgage?

Can someone explain the in's and out's of how I/we would go about this?

I normally could do with a step by step guide.

ACG

Why are you buying it? Whats the purpose of the new purchase?
What will happen to your current property and your friends current property?

Trying to establish if you are buying to rent out one of the properties or....

goodmorningsunshine

ACG wrote: »

Why are you buying it? Whats the purpose of the new purchase?
What will happen to your current property and your friends current property?

Trying to establish if you are buying to rent out one of the properties or....

It's an auction property so will renovate it and then either sell or rent, but we will keep both the properties we are in at the moment.

Caz3121

Will your salary support both mortgages together?
What is the LTV on your current property and how much deposit do you have for the potential new property?

Yorkie1

Have you fully explored the implications of buying at auction? The need to put 10% (?) deposit down on the day, and a 28 day timescale after that? You'd need to be sure of having the mortgage lined up before bidding, because you can't pull out afterwards (unlike a regular purchase).

Bear in mind that most lenders appear to be slow at the moment because of changes in lending in the residential market.

When you say 'renovation', what needs doing? Does the property presently have a kitchen and bathroom?

goodmorningsunshine

Possibily not which is why I would need someone else to go in with me.

LTV on my property is between 50-60%.

I could manage 10% maybe more for a deposit.

ACG

10% on the day... the actual deposit will need to be 20-25% for what will either be a buy to let mortgage or a developement mortgage.

How long will the renovation take? Most lenders have a 6 month rule where they will not put a mortgage on a property that has been purchased 6 months prior (not a problem for you, but whoever is buying from you will have a problem).

goodmorningsunshine

Yorkie1 wrote: »

Have you fully explored the implications of buying at auction? The need to put 10% (?) deposit down on the day, and a 28 day timescale after that? You'd need to be sure of having the mortgage lined up before bidding, because you can't pull out afterwards (unlike a regular purchase).

Oh Yes, been there, done that, got the T shirt ,
although I only needed a 3% deposit on the night of the auction from what I can remember.

But actually put down a 15% deposit in total.

Bear in mind that most lenders appear to be slow at the moment because of changes in lending in the residential market.

When you say 'renovation', what needs doing? Does the property presently have a kitchen and bathroom?

Nothing major, would need kitchen units, but it does have a bathroom 3 piece plus shower unit.

goodmorningsunshine

ACG wrote: »

10% on the day... the actual deposit will need to be 20-25% for what will either be a buy to let mortgage or a developement mortgage.

That may be on the neat side, but maybe managable, will have to do a few sums.

How long will the renovation take? Most lenders have a 6 month rule where they will not put a mortgage on a property that has been purchased 6 months prior (not a problem for you, but whoever is buying from you will have a problem).

Renovation, I would hope take no longer than 3 months, tops.

Oh, and need to ask, would there be an age limit on a second mortgage if shared with someone else, as my first mortgage was offered at either 14 or 18 years. (cause I'm old:eek:)

ACG

So if you renovated and then decided to sell you would be stuck with a mortgage for an additional 3 months.

BTL mortgages are slightly different than residential mortgages but you could probably get away with having it run until your 70-75th birthday without too many issues.

I think you need to sit down with a broker to see what is possible. Then decide if that will fit in with one of your plans.

goodmorningsunshine

ACG wrote: »

So if you renovated and then decided to sell you would be stuck with a mortgage for an additional 3 months.

That wouldn't be a problem

BTL mortgages are slightly different than residential mortgages but you could probably get away with having it run until your 70-75th birthday without too many issues.

So that would be the same term as I have now, although was considering reducing my term by 6 years with a slight overpayment, then thought about this second property.

I think you need to sit down with a broker to see what is possible. Then decide if that will fit in with one of your plans.

I am now out of my fixed rate as it was only for 2 years, and have made an overpayment of 10% or thereabouts, so now looking for a new deal.

But if going for a second mortgage would obviously effect my decision on the first.