BTL/Second Mortgage - Is this Possible?

mhendo

Good Evening All,

I'm after some expert wisdom if you don't mind;

Current Situation


Possible BTL/Second Mortgage

I'd like to know if this is at all feasible, whether to re-mortgage to 65% on the current property and then take out a second/BTL mortgage.

Any advice & assistance would be greatly appreciated.

Cheers,

Thrugelmir

You'll struggle to arrange a mortgage through a Limited Company. What's your line of thinking behind this.

Two hurdles you face is to find a lender willing to release equity for the purpose proposed and a lender willing to accept a deposit from such a source.

When leveraging with debt the returns multiply but so do the risks. Lenders on the whole prefer the borrower to take more of the risk. As mortgage lending isn't priced with this in mind.

mhendo

Evening Thrugelmir,

Many Thanks for your reply,

Main thinking behind the company, is keeping the property as an HMO after purchase and becoming a Landlord for a short/medium term, with the view to convert the dwelling back to a single residence (possibly).

I understand our cash position at the moment is less than ideal, but the property seems to be priced well for potential returns in the medium term, with similar single dwelling properties selling for £400,000 upwards.

Cornucopia

If it were a single tenancy, and you could get to 25% deposit, and it was a personal purchase (not a company), then it would be doable. All of those factors make it more complicated.

If this is your first BTL, I would start with something simpler: using the £30k as a deposit on a property of c. £120k.

mhendo

Thanks Cornucopia,

I understand the potential purchase to be more complicated than usual,

I suppose it wouldn't be ideal to jump into this property type first usually but the property style/size/location seem to be good and as i said previously this type of property usually seems to be worth over £400k.

If it's a case that it's not possible, then so be it. But i'd like to exhaust any potentials, and get a better understanding of what lending limits there maybe for both second home/commercial mortgages.

Edit, I know the property is currently an HMO, but would a mortgage provider provide a "Personal Mortgage" with the view of serving notice on the current tenants?

Cornucopia

You'll need to find a decent mortgage broker - they'll give you an idea of whether it's practical, and what the likely costs will be.

amnblog

mhendo wrote: »

Thanks Cornucopia,

I understand the potential purchase to be more complicated than usual,

I suppose it wouldn't be ideal to jump into this property type first usually but the property style/size/location seem to be good and as i said previously this type of property usually seems to be worth over £400k.

If it's a case that it's not possible, then so be it. But i'd like to exhaust any potentials, and get a better understanding of what lending limits there maybe for both second home/commercial mortgages.

Edit, I know the property is currently an HMO, but would a mortgage provider provide a "Personal Mortgage" with the view of serving notice on the current tenants?

No because they won't believe you.

If you are serious about this, engage a mortgage broker with decent BTL experience. You have your head full of ideas which lenders wont like and you need some expert guidance.