Using first house as collateral on second

emphyrio_2

Please bear with me as this situation is a bit complicated.

I am lucky enough to have been left a house on the south coast. I live and work in London and rent a flat there, so the south coast house is let out.

Ideally I would like to buy somewhere nearer where I live. I have a deposit of about £25,000 but I only earn £20,000 pa before commission.

I don't really want to sell the south coast house. Would a lender allow me to use it as collateral against a mortage on a flat in London? I could afford the mortgage payments as they'd be less than my rent, but on my salary I couldn't borrow enough to afford anything.

Alternatively, could I take a co-mortgage with one of my parents to give a higher income, with the south coast house as collateral? My parents understandably don't want to remortgage their own house.

Or is the only option to sell my house and use that to finance a London flat instead?

Many thanks for your suggestions

mrginge

You cant use one house as collateral on another.

Instead you remortgage the south coast house to raise the funds to purchase the flat.
You've not provided any numbers so no way of ascertaining whether this is actually feasible, but that's the solution.

amnblog

If your partner are suitable guarantors there should be a way to deal with this. You cannot use one property as collateral for a mortgage on the other.

That is not the point here, you don't need to do that.

Get some advice from a good mortgage broker.

kingstreet

Oh how I hanker for the days when the Staffordshire Building Society used to offer its cross-charge facility. One mortgage secured on two properties.

Long gone, but never forgotten.

Thrugelmir

emphyrio wrote: »

but on my salary I couldn't borrow enough to afford anything.

Then doesn't matter what assets you already have. As the additional debt is unaffordable so you are doomed to default.

Common sense says to sell the property and use the equity to fund a home for yourself.