Purchasing Property

rugby_fan_22

I will get straight to it.


We are in the lucky position to say that we own our houseoutright and have another property which is rented out and is also paid for infull.

As I am ignorant in the way mortgages work I just wanted toknow how I bank roll our venture.


My first thought was to re-mortgage the rental house whichwas valued at £80,000 approx. 18 months back (I do not know if the market haschanged that much) and therefore have a large deposit for the next rentalinvestment. I do not know what ratio/gearing can be generated fromre-mortgaging or if the outlay would be cost effective.

We have £700 per month (every month without fail) that weput away solely for the purpose of investment in property and as our home andrental property is paid in full we have accumulated over £30,000 in savingsthat we could add to the re-mortgage amount (if it is viable) to have a hugedeposit.


My main query is if we have one buy to let mortgage can wethen get another buy to let mortgage at the same time? All be it in a year ortwo.

My logical thinking is that as long as our monthly savingsof £700 does not exceeded our mortgages we will never be in a difficult situationif for instance the property/properties were not rented out etc.

Our income is in the region of £45,000 but I also recieve a bonus anually os 25% salery and have a rental income of approx £5,000 but have not considered them as they could change at any time



Our reason for wanting to go into property is as inflationis more than the average interest we are not making any money on our savings.

On top of this, inflation will also mean that property valuewill always tend to increase (although again not definite) if kept for aprolonged period. They say a property value doubles every 10 years but I thinkthat is very optimistic but even if it was only 30-40% it would be a verysuccessful investment.

In very simplistic terms our very raw outlying plan is asfollows

Use property 1 equity to place deposit on property 2.

The large deposit along with our savings will mean that wehave a very large deposit to minimise borrowing, or even buy the propertyoutright.

In approx. 2-3 years we will have accumulated more savingsand 2-3 years rent (covering the two mortgages) we will then have equity inproperty 2 as we put down such a large deposit to begin with along withinflation we will once again have a very large deposit for property 3, in 2-3years then repeat.

I fully appreciate that this is a very rough and ready planhence asking for your expertise.


If you could advise how we go about financing our venture wewould be most grateful.

We are deadly serious about this venture and it is not somepie in the sky idea, we fully intend to follow through so you know that thetime you take to respond to this will not be in vain.



We look forward to your response, thank you in advance.

Hoploz

Your post is very long!

You can have more than one BTL mortgage. It is not normally dependent on your personal income but the rental return. Not exact figures but I think you can borrow 75% Loan-to-value, and the rental income has to be 125% of the payments.

Best thing is to speak to an independent financial advisor who will give you the proper info

Hope that helps a bit