BTL - is this possible?

bewilderedhelpneeded

I currently have a property that I live in that I own and have outstanding mortgage of 100k on. Im overpaying as much as I can each month to bring mortgage down quicker. House worth approx 325k. My ex has charge against property and im due to pay him approx 150k in 3.5 years time.

I remortgaged the house to fund deposit for BTL on another property which I bouught and renovated with BTL interest only mortgage. Rate on BTL was high so when my existing mortgage lender said they would lend me money to pay BTL off on repayment mortgage for not much more per month I jumped at the chance. So now my BTL property does not have any mortgage secured on it and my main house does (total approx 100k) so I calculate I have 225 equity in my house of which 150k is my exs and rental property worth approx 130k so I calculate I could get my hands on 205k if I sold both (although I would be homeless!)

I would love to keep both houses but mortgage company wont lend me the 150k to pay ex off as I already have mortgage for 100k and I dont earn enough to get 150k more.

would I be able to get BTL for 150k against my main house so I can rent it out (would fetch approx 1200 a month rent) this would allow me to move into rental property and use rent money to pay BTL off. This is only way I can see of being able to keep both houses and pay my ex his money.

bewilderedhelpneeded

Does anyone have any ideas on this please?

kingstreet

Remortgage the BTL to raise 75% of the £130k value and ask current lender for further advance of £53k on residential?

bewilderedhelpneeded

Unfortunately current lender no longer in mortgage market (intelligent finance) so further advance would not be possible and id struggle to get additional mortgage elsewhere due to fact I have 100k mortgage already and I simply dont earn enough to borrow the extra

kingstreet

If the residential is worth £325k and the rental income is £1,200 per month, you should be able to borrow upto £192k on a "let to buy" basis. I used 6% and 125% to calculate maximum.

After you've paid off the existing £100k mortgage, that would leave you £92k, so you'd then have to remortgage the current BTL you'd then be living in, on a residential basis, to raise the £58k you need to make up the difference to get to £150k.

Hopefully, that will be affordable?

See an independent broker to get this pieced together correctly.

bewilderedhelpneeded

Ah get you now! I thought you meant remortgage current rental property and then borrow additional on residentual. If I can get btl on residentual then use to pay off current mortgage that makes sence!

booksurr

bewilderedhelpneeded wrote: »

Unfortunately current lender no longer in mortgage market (intelligent finance) so further advance would not be possible and id struggle to get additional mortgage elsewhere due to fact I have 100k mortgage already and I simply dont earn enough to borrow the extra

you are forgetting that the current 100k mortgage would have to be paid off as part of converting that property to a BTL. therefore, as kingstreet says, you would end up with a new BTL mortgage on one property whose "affordablity" is not based on income but is based on the 6% and 125% rule and a new residential mortgage on the other property based on your income.

The latter is less than the 100k you currently have so in that sense would be easily affordable, but the question for you would be whether you have enough surplus funds to cover a 192k BTL mortgage if the rent stops coming in....

bewilderedhelpneeded

Yep - thats the scary part in all this! Ill see mortgage broker to see if this is doable or not