Remortgaging, BLT and 2 mortgages?? Is this possible

fluffpot

Hello

Just after a little advice before I call any mortgage advisor's to see if this is even possible.

The background
We own a property outright. We have seen a property we would like to buy and move to, but keep our current home and let it out. We could put down 20% for the new place, but do not earn quite enough with current salaries to be able to get a mortgage for the 80% balance.

I understand that the rental income would be taken into account for the mortgage calc, but the problem is that the lender would want to see 2-3 months rent before making a mortgage offer. We could move out and rent in the meantime, but in 2-3 months the house we like may well be sold.

SO, I read about the following option on line: (my italics)
you remortgage your existing property to release enough equity to pay a larger deposit on a mortgage for the new home. The mortgage on the old home is then converted to a buy-to-let deal (as long as your lender lets you), with the rental income used to cover the mortgage repayments - which it would in buckets as we don't need to borrow much. The mortgage on your new home is based on your income as normal. (as we now have a larger deposit, this would work)

The BTL mortgage would be for under £100K (10% value of our existing home)

My questions are:
Can this be done?
Is it massively more expensive eg rates and fees and/or a hassle?
Can you have two mortgages? (I guess the answer must be yes, if 1 is BTL)
Is there a better way of raising the £100K extra to boost our deposit? Apart from robbing a bank or winning the lottery

thanks in advance for looking.
Fluff

PS No bacon sarnies were harmed in the writing of this email....

Fruit_and_Nut_Case

fluffpot wrote: »

Remortgaging, BLT and 2 mortgages?? Is this possible

I just saw the title and wanted to thank you for giving me inspiration for my lunch

Mortgage_Mark_2

Technically you can raise the whole lot by way of a remortgage, if the sums add up - it's called a 'let to buy' by lenders, rather than a BTL, even though the actual mortgage is virtually identical.

You won't need to evidence 2/3 months worth of rental income for this as, clearly since you live in the property at the moment, it hasn't been rented yet. The valuer will likely confirm a market rent, in addition to getting an ARLA registered letting agent to confirm in writing an estimated rental value.

fluffpot

Hi Mark

Thanks for the very quick response. This is why I love this forum! I'd never even heard of let to buy. I will do some investigating as this sounds more straightforward than what I had outlined

I'm guessing I need to go to a specialist broker as the big ones don't do this type of thing? One thing I forgot to mention is that we are both self employed, but if the mortgage is based on the rent then I guess this doesn't make any difference?

Once again - many thanks
Fluff

Mortgage_Mark_2

Hi Fluffpot,

Definitely one for a broker as a lot of lenders that will do a BTL/LTB mortgage are introducer only, so even if you wanted to deal with it yourself, there would be more options through a broker.

The other reason for seeing a broker is your self-employment. A few lenders don't have minimum income requirements for BTL/LTB mortgages, and may not request proof of income, however if they do ask for income verification, you need to ensure that you can meet their requirements.

Which broker? I'd ask around family/friends and see if they've used any that they'd recommend as that's always the most reliable way of finding one.

Good luck, sounds like all things being equal there should be a solution.

MM

fluffpot

Thanks for that, Mark. You've been very helpful

We both have SA302's for at least the last 3 years, so hopefully this will be OK