Using existing home as a deposit for a new house?

InhaleMood

Hi,

I'm trying to help my friend out, she is in a situation that she just can't see a way out of.

She has lived in a small one bed flat for the last 10 years. Her mum and step dad bought it for her and she paid rent up until earlier this year. She then bought the remainder off of them and is now paying a mortgage for the rest.

She doesn't earn very much and doesn't see how she will be able to save for a deposit to eventually move into a bigger place.

She has about £30k in the property, would she be able to use that as a deposit for a new place and convert this mortgage to a buy to let?

Any thoughts would be appreciated

ACG

How much is the current property worth?

There would need to be atleast 25% equity in the property AFTER she has pulled out however much she wants from it.

Why not sell the property and get the full £30k out of it to put down on another property?

Personally, I dont think I would touch this as a broker...
She has little income and is unable to save towards a deposit, yet she wants a bigger property?

What happens when rates rise?

If she put the current property on a BTL, what happens if the tenant stops paying or it is empty for a while? I don think a BTL is a sensible option as she would have no income for any void periods and that would leave her very vulnerable.

Foxy-Stoat_3

Speak to a broker with more information.

BTL mortgages need to have a LTV of 75% and the rent needs to be 25% more than the mortgage payment but the lenders aren't keen unless you have a residential mortgage already.

Income, flat value and the second house value is required and does your friend really want to be a landlord?

InhaleMood

Thanks guys, it looks like she needs to speak to a broker about this.