General mortgage questions

kempstar

Hello

We recently started a new mortgage, it is a two year discount product, currently at 1.7%. The mortgage balance is £415k, the house is worth approximately £650k. Mortgage is £1,800 a month.

We also have a flat that we rent out, the mortgage is in my wifes name only, it is on consent to let and has been for a couple of years. That mortgage is £141k, fixed for five years at 3.65% until Sep '17, flat is worth approx £315k, mortgage is £433 a month, gross rent is £1300 a month.

We have had a change in circumstances, which will mean we will need to move again in 1-2 years. All being well, I would like to keep both properties, and convert the house mortgage to a BTL.

We would be looking for a mortgage of around £600k, with a deposit of around £200k. I want to avoid any ERCs if we can!

If it turns out that we need to move in a year, rather than two, assuming we can get consent to let the house, presumably this would limit my ability to get the £600k mortgage we need? Income is approx £170k per annum.

The other option is to sell the house, and port the mortgage. We may need to borrow a bit more, as we might looking at spending more than £800k if we sell the house. Generally, how easy or difficult is this to do? The lender is Furness BS if that helps.

Thanks in advance

amnblog

Having two properties on 'consent to let' would not, in itself, limit your ability to get the loan for the new property.

kempstar

OK, thats good to hear.

So then, lets say in 12 months time, I switch the house to CTL, with the plan to switch it to a proper BTL after 12 months.

So in theory there wouldnt be a problem with me getting a £600k mortgage for a new house at that time? Even though I would already have a mortgage for £415k? Thats great news if so.

amnblog

In theory, no.


Everything is subject to underwriting.

kempstar

OK thanks. I just assumed if it was assessed using standard income multiples, then I wouldnt be able to have two mortgages at the same time. Good to know it might be possible

amnblog

Provided your consent to let properties are 'self funding' they do not impact anything.


Self funding typically means the rent covers the mortgage payments by 125% although it can vary with different lenders.

somethingcorporate

amnblog wrote: »

Provided your consent to let properties are 'self funding' they do not impact anything.


Self funding typically means the rent covers the mortgage payments by 125% although it can vary with different lenders.

Depending on lender that can be either 125% of the interest element of the mortgage payment or 125% of the total mortgage payment (which assuming you are on a repayment mortgage) is likely to make a significant difference.

When we mortgaged recently with NW they use the total mortgage repayment rather than the interest element on our C2L property. Hence switching to a B2L (or IO) mortgage can be helpful when you are looking to buy a new place.

JimmyTheWig

kempstar wrote: »

I want to avoid any ERCs if we can!

Presumably if you put the current house on a BTL mortgage you can port the current mortgage to the new house and not pay ERCs?

kempstar

OK I see what you mean.... If that is an option too, then that would be great.

Regarding rental cover, the mortgage is around £1800 a month repayment, interest element is around £600 or so, at a guess. Rent for this place would be somewhere around £2200 a month at a guess.