Advice on borrowing additional funds for a buy-to-let which needs work.

MrBitey

Hello there,

I wonder if anyone here could give us a pointer/advice re borrowing money against our house.

We have fully paid off the mortgage on the home in which we live and are hoping to but a second property to rent out.
We have enough money to buy a particular property that we very much like the look of outright. However, it needs lots of work and we will need to borrow about £50-60,000 to do this. In total we will need about £280,000 and we have about £220,000. Our current home is valued at about £300,000.
So what would be the best way and cheapest way to borrow the extra? We will need some time to pay it back (maybe over 10 years).

thanks very much in advance,

MrB

Thrugelmir

£50k to £60k sounds like property development as oppose to refurbishment works. What's the nature of the proposed works?

MrBitey

Hi Thrugelmir, thanks for the reply.
The house is going to need re plastering, rewiring and a number of ceilings replacing. New carpets, decoration throughout. The garden needs clearing and landscaping. We also want to have a small extension (max size allowable without additional permission) added and the current (empty) kitchen moved into this extension. So, yes there is a fair bit of development involved...Our favourite builder reckons around £50 give or take...

Anyway, any ideas how we might borrow/remortgage against our current home (mortgage already paid off)?

Thanks in advance,

MrB

kingstreet

A residential remortgage would be cheapest route, subject to affordability, term etc.

However, you'll find it more difficult to get interest-only going this way, if that is your preferred option.

As the use of the funds will be to further your letting business, interest will qualify as a trading expense, reducing the taxable residue of the rent you receive after expenses.