Buy To Let mortgage and release capital?

MonkeyDr

Hi,

I'd welcome some advice please.

I own a flat and have a regular mortgage, but currently let the property and have consent to let.

The consent to let will run out in a few months and I will need to get a regular Buy To Let mortgage. When I do this I would like to release some capital - probably around an extra £60k. My mortgage is pretty small at the moment, so even with the addition I will still only be looking for around 40% LTV, and the gross rental income is about 200% of the likely repayments so should be easily affordable.

I have spoken to my current lender (HSBC) who say that while they are happy for me to change the mortgage to a BTL, they can only do this if the numbers stay exactly the same. Apparently they have a policy of not allowing extra borrowing with buy to let mortgages, and it's nothing to do with my personal finances.

Is this the case with all BTL lenders? It seems a bit odd that they would be able to lend me much much more than I actually want if I was making a new purchase, but can't do this...

Any guidance much appreciated.

MD

Thrugelmir

By releasing equity to buy another property you are leveraging up. So changing the risk to the lender. A different proposition is injecting a cash deposit of 20% - 25% into a BTL.

MonkeyDr

Thank you for the reply.

However, I'm not planning to spend the extra money on another property - I want to use it to pay off some tax bills for a relative.

The HSBC man basically told me that it would be fine for me to get a BTL mortgage of £200k on a flat worth £500k if it was a new purchase, but they can't convert my residential mortgage of £140k to a BTL one of £200k on the flat worth £500k that I already own. I don't see how the risk is any different. Am I missing something?

I would be grateful if anyone knows of other lenders that might be more helpful.

Thanks,
MD

amnblog

HSBC clearly wont help - other lenders will.

Use a broker to obtain lending from an alternate source.

MonkeyDr

Thank you. I'm reassured that other lenders will be more helpful.

This is the first time that I have dabbled with Buy To Let, and I feared that maybe you weren't able to release equity with BTL mortgages.

Many thanks

rippers255

amnblog wrote: »

HSBC clearly wont help - other lenders will.

Use a broker to obtain lending from an alternate source.

Try London & Country brokers. They are excellent. Just remortgaging a btl at the moment with them.

m_13

I had a thread on here some weeks ago about capital raising. Post Office wouldn't allow us to capital raise on a BTL property unless the capital was for either improvements on the property itself or to buy another BTL property. As we wanted the money to do work on our new house we were outside of their lending criteria. We've ended up with The Mortgage Works via a broker. We've had a nightmare since trying to sort out the mortgage valuation but hopefully it will happen on 3rd July.

Have you considered the tax implications of doing this? I believe the amount you can claim interest for is the value of the property when first brought into the business. We couldn't raise a loan larger than that value (we didn't want to anyway so it's a moot point) and still be able to claim the mortgage interest as a BTL expense.

MonkeyDr

Thank you. I've discussed it with a broker and he is confident that we will sort something out.

I pay the correct tax on my rental income. I was vaguely aware of the possible limit on how much I could borrow / claim relief for base son the property value when first let, but haven't checked out the details as it's also a moot point for me, based on my proposed LTV.