How to use existing BTL properties to get a mortgage for another BTL property

Skag

Here's the scenario:

Say I have 2 houses 250k worth each, with no mortgage on them. They rent for 1500pcm each. I want to buy a 3rd house for BTL purposes but don't have, or don't want to spend extra cash on a mortgage. Can I somehow use the hypothetical future cash from the 2 properties, plus the hypothetical future rents from the 3rd property to get a mortgage?
Also, where can I find more info on this?

G_M

Skag wrote: »

... but don't have, or don't want to spend extra cash on a mortgage. ..... future rents from the 3rd property to get a mortgage?

You do want a mortgage or you don't?

If you want to buy a 3rd property, get a mortgage on the property 1 and/or 2, and use the money to buy property 3.

The Complete Guide to Residential Letting (also available here)

00ec25

a BTL mortgage requires:
a) 25% cash deposit
b) rental income to cover 125% of the mortgage interest at 6% interest rate. Your rental income stream on 1,2 and 3 is counted

you could get the deposit by taking a mortgage on property 1 or 2 with the balance as a mortgage on property 3

alternatively

you could just buy property 3 with cash assuming you can raise enough funds by taking a mortgage on property 1 and/or 2 as required (subject to 75% LTV on each)

Skag

G_M wrote: »

You do want a mortgage or you don't?

If you want to buy a 3rd property, get a mortgage on the property 1 and/or 2, and use the money to buy property 3.

The Complete Guide to Residential Letting (also available here)

Many thanks for the suggestions.
I do want to get a mortgage to get the 3rd property. However I don't know what it means to get a mortgage on a property (or two for that matter).
Does it mean that the bank finances the complete amount of the 3rd property without me paying extra, and then gets its money back from rents? (from property 3 and/or 1 & 2).

00ec25

do you seriously not know how a mortgage works ?
get a book before your day dreams about property empires bites you

http://www.amazon.co.uk/s/ref=nb_sb_noss_1?url=search-alias%3Dstripbooks&field-keywords=letting+property&rh=n%3A266239%2Ck%3Aletting+property

Skag

00ec25 wrote: »

do you seriously not know how a mortgage works ?
get a book before your day dreams about property empires bites you

http://www.amazon.co.uk/s/ref=nb_sb_noss_1?url=search-alias%3Dstripbooks&field-keywords=letting+property&rh=n%3A266239%2Ck%3Aletting+property

Well, yeah, seriously. I'm not native and never had to get a loan or a mortgage. Everyone's got to start somewhere!

Foxy-Stoat_3

Suppose you don't pay any income tax on the rents either?

If you do then you need to speak to an account and take out one or two BTL mortgages to help off set the income tax payments.

AndyT678

You have property worth £500k so theoretically you might be able to borrow 75% * £500k = £375k (assuming the income covers 125% of the mortgage interest)

You can then use this money to buy a house outright. You then have 3 houses with mortgages on the 2 that you currently have.

OR

You could use the £375k as a 25% deposit on a house of £1.5m and get a mortgage for the rest - extreme scenario but illustrates the point. You will then be mortgaged up to the hilt on all 3 houses.

anselld

Foxy-Stoat wrote: »

If you do then you need to speak to an account and take out one or two BTL mortgages to help off set the income tax payments.

There is no point taking BTL mortgages just to offset tax. Only sensible if you can reinvest for a better return than the mortgage rate (net of tax).

ViolaLass

Foxy-Stoat wrote: »

Suppose you don't pay any income tax on the rents either?

If you do then you need to speak to an account and take out one or two BTL mortgages to help off set the income tax payments.

Getting a BTL mortgage solely to decrease your tax bill is like buying shoes you don't need in a sale to save £30.

Really daft.

OP - even if you're not an English speaker, does your native country not have mortgages?

Foxy-Stoat_3

ViolaLass wrote: »

Getting a BTL mortgage solely to decrease your tax bill is like buying shoes you don't need in a sale to save £30.

Really daft.

OP - even if you're not an English speaker, does your native country not have mortgages?

I thought the OP wants to buy another property........