Rental remortgage question

dave1992_2

Hi,

If I own a property outright and i get rental income, and I want to remortgage, as long as the rent covers the mortgage, will be the lender be fairly lenient on my other income level, which is actually quite low? (and if the answer is no, is that just because of the new affordability rules?)

thanks
Dave

kingstreet

If this is a remortgage of an unencumbered BTL property and you own another residence, some lenders still require a personal income above a minimum level.

Others are more flexible, but you have to ensure your rental income is at, or above 125% of the monthly mortgage interest assuming a rate of about 6%, to be safe.

A broker would be best place to discuss this as you have potential issues for decline when going direct.

dave1992_2

Hi

Many thanks for the reply.
Yes, the rental property is unencumbered. I should be able to have the rent at 125% of the mortgage interest (actually I hope the capital repayment)

I don't own another property - I rent one.

regards
Dave

Cornucopia

Most BTL lenders require that you are a home owner.

amnblog

What is the purpose of the remortgage Dave?

dave1992_2

The purpose of the remortgage is to free up the cash while hanging on to the property as a rental. I want to use the cash to buy another flat.

Presumably by 'home owner' you mean own the property that is your home, rather than just 'property owner'

thanks
Dave

amnblog

You are going to find it very difficult to get funding whilst living in a rental and earning under £25,000 Dave.

Consult a broker.

dave1992_2

OK, thanks, will do. Seems a shame since I would have two similar rental incomes and only one mortgage, well covered by one of them, but, yeah, I understand.

Thrugelmir

Releasing equity to fund a deposit isn't a purpose that many lenders will consider. Nor will the new lender approve of a borrowed deposit. As leveraging with debt creates an unstable house of cards.

dave1992_2

Sure, and I'm in general agreement with that, but this isn't quite the same as get BTL mortgage, wait a year until it's gone up, remortgage to release equity and use that as deposit on another BTL mortgage.

This is, own rented property, remortgage at 75% LTV where the rent more than covers the mortgage, then use the whole proceeds to buy another BTL. The main resulting difference being - own two properties with one mortgage, which is significantly different to owning two with two mortgages.

Wh05apk

This should not be an issue, there are a few lenders who classing you as an "experienced" landlord will allow a remortgage for further property investment, without having to meet minimum income criteria.