Let to Buy/Buy to Let Query

tightasagnats

Hello folks.


I'm interested in buying a flat to rent out.


I have a flat where I live, don't wish to move. Value is around £320,000. Outstanding mortgage £125,000.


Looking at flats for £130,000 with a rental of £800-£900 a month.


I know that under Let to Buy you can borrow up to about 65% of value of new property and get a mortgage for the remaining 35% if I am correct? But I would have to move into the new one and let the current. I do not want to do this.


Is there any way to use the equity in my property to raise finance for a new property i.e. Buy to Let? Assuming I have no cash of my own to use as a deposit. Income is £25,000.


Many thanks.

kingstreet

Residential remortgage on your current home?

New application to new lender raising funds to repay current mortgage and provide purchase funds (or decent deposit at the minimum) for the BTL purchase.

Subject to affordability etc.

As. I see affordability is going to be a problem as you don't have the income needed to support your existing mortgage, let alone a higher one.

tightasagnats

Yes residential mortgage on current property.

I remortgaged earlier this year, no problem on affordability.


I also get a rental income on a room from a lodger, just under £5000pa but that wasn't considered by the lender.

kingstreet

Yes. £125,000 is about the most you'll get from any lender on a salary of £25,000 with no credit commitments, dependents, childcare, ground rent/service charge etc.

What you won't be able to do is borrow more to fund the deposit for your BTL on your residential property/mortgage.

Yes, you'll get a mortgage on the BTL property based on the rental income of that property, but you'll need at least 20% deposit, possibly more and you don't have the affordability to raise that via a mortgage source involving your own home.

tightasagnats

kingstreet wrote: »

Yes. £125,000 is about the most you'll get from any lender on a salary of £25,000 with no credit commitments, dependents, childcare, ground rent/service charge etc.

What you won't be able to do is borrow more to fund the deposit for your BTL on your residential property/mortgage.

Yes, you'll get a mortgage on the BTL property based on the rental income of that property, but you'll need at least 20% deposit, possibly more and you don't have the affordability to raise that via a mortgage source involving your own home.

Many thanks, that's helpful and makes sense. Will keep on saving

tightasagnats

Just another question in this thread, which someone suggested might work, if moved out from current flat, let that out entirely, and move into new one? If I had a Let to Buy mortgage on the current flat, value now £330,000 - owe £120,000 (£210,000 equity) I could get a BTL mortgage for 75% which I calc to be about £247,000 - minus the £120,000 owed leaves £127,000 toward a new property - is this right??

However, as pointed out before this doesn't allow for enough for purchase of new property, I earn £25,000 so could get about £120,000 (just did a year ago) so total would be £247,000?

My question now: would a lender consider rental income from lodgers in NEW property as income? I have always let a room and would wish to continue, and in new property would have two rooms to rent (in addition my own) and this would generate £1300-£1400 a month in addition to my salary. London so no problem ever getting lodgers and have statements going back years showing rental income in current flat.

Thanks

kempstar

Where in London can you get a flat for £130k, let alone one that rents for £800-900 per month?

Or indeed a three bedroom flat for £247k?

tightasagnats

1. West Ham, Manor Park but no longer considering this area

2. You can't in the area I want to buy which is why I asked whether rental income on the second property from lodgers would be considered as more finance would need to be raised.