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Remortgage or By to Let?

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GMan5000
GMan5000 Posts: 3 Newbie
edited 24 October 2014 at 10:48PM in Mortgages & endowments
Hi,
Remortgage or buy to let?
Might sound a silly question but as the last time I dealt with a new mortgage was almost 20 yrs ago I am relatively "new" to this.
I have a property with a tiny mortgage on it. I'm looking to use the equity on this property, combined with a cash lump sum to buy another property to live in. The property I am looking to use the equity on I intend to privately let. As I am not effectively buying a property to let would I be able to just borrow the money on a "remortgage" loan basis attracting far better interest rates as opposed to a "buy to let" mortgage loan basis where the rates of interest are higher?
Many thanks in advance for any info.

Comments

  • Thrugelmir
    Thrugelmir Posts: 89,546 Forumite
    Part of the Furniture 10,000 Posts Name Dropper Photogenic
    The purpose of the released funds may well be questioned. Additionally the fact that the deposit is borrowed money may add complications as well.
  • dimbo61
    dimbo61 Posts: 13,727 Forumite
    Part of the Furniture 10,000 Posts Name Dropper Photogenic
    It is usually cheaper to buy your BTL property with cash !
    So if you own a property worth say £400K and only owe £20K on that property you should be able to borrow up to £280K so £300K in total 75% LTV
    This depends on Income, age, credit score etc.
    Again one for a whole of market mortgage broker.
    Tax wise you may be better off with an Interest Only BTL mortgage on the rental property as you can offset the Interest payments again you rental income.
    Do you have an accountant ? Who deals in Renting and BTL
  • Cornucopia
    Cornucopia Posts: 16,477 Forumite
    Part of the Furniture 10,000 Posts Name Dropper Photogenic
    edited 24 October 2014 at 11:07PM
    Sounds like a Let-to-buy scenario. I would look for a completely new LTB mortgage for the existing property - these are generally similar terms to BTL.

    If you keep your existing lender, you will need an additional advance and consent to let at the same time, which they may not be happy with.
  • Thanks guys,
    This is day 1 so I will be contacting advisors and my accountant to discuss further. Just thought I would try this thread site first.
    This is also the first time I have ever posted a thread and due to your most informative and prompt replies I will be doing this again should the need arise.
    Thanks again!
  • Wh05apk
    Wh05apk Posts: 2,938 Forumite
    Part of the Furniture 1,000 Posts Combo Breaker
    The cheapest way would likely to be to get a mortgage on the new property, as rates will be lower.


    From a tax point of view it doesn't matter where the loan is secured, potentially you could offset it against your rental profits.
    I am a mortgage adviser.
    You should note that this site doesn't check my status as a Mortgage Adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice.
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