Remortgage to buy rental property

kingstreet

You can do the two concurrently.

Many BTL lenders have a higher minimum purchase price than £55k and the minimum loan can be £40k+ so be careful.

Full costs/fees are in secrtion eight of the key facts illustration you should look at before proceeding. At the numbers quoted, you should be looking for higher rate/lower-no fee deals.

LEJC

Craig_Donny wrote: »

No its a free hold end of terrace house.

ok so no leasehold but you will be responsible for buildings insurance and the other costs of rental...gas certs etc
and also as you hold the freehold sadly you will be responsible for all repairs from the roof downwards....


What sort of age is it...are you likely to require rewiring,new boiler or replacement windows...and if not now how long do you hope the exsisting fixtures to last....all things to consider for rolling maintainence in a rental property...if you rental income is covering mortgage costs with only a little shortfall its in your interest to provide upkeep on the property to ensure maximum rental is achieved,rather than letting the property slip and not keep up with the market.
Rentals in my experience are something that you go into with aa longterm plan rather than being able to achieve a quick profit after a couple of years.

Craig_Donny

kingstreet wrote: »

You can do the two concurrently.

Many BTL lenders have a higher minimum purchase price than £55k and the minimum loan can be £40k+ so be careful.

Full costs/fees are in secrtion eight of the key facts illustration you should look at before proceeding. At the numbers quoted, you should be looking for higher rate/lower-no fee deals.

Ok I have a better look through and found some free/low rates that are only about £10 a month or so more.
I am currently doing it through compare the market, who must contract it out to a company called "if I were you" they charge £400 for their service. Can I go direct to the companies that come up and get the same deals? Do you suggest any other ways of looking?


Also can I ask where I find "section eight of the key facts illustration", sorry for being abit daft, don't use the site that much. thanks

kingstreet

Much of the BTL market is still broker-centred, so a broker working for you is a good idea. Research direct products yourself as well.

FWIW a BTL mortgage for £28k is worth £140 to a broker and the residential remortgage for £91k is worth £300, so you should expect to pay a fee. How much that will be will vary from broker to broker.

kingstreet

Craig_Donny wrote: »

Ok I have a better look through and found some free/low rates that are only about £10 a month or so more.
I am currently doing it through compare the market, who must contract it out to a company called "if I were you" they charge £400 for their service. Can I go direct to the companies that come up and get the same deals? Do you suggest any other ways of looking?


Also can I ask where I find "section eight of the key facts illustration", sorry for being abit daft, don't use the site that much. thanks

Any lender or broker must provide you with a key facts illustration before you proceed with a mortgage application.

Mallotum_X

Have you spoken to your current mortgage company?

I'd start off by speaking to them and see what if any products they would lend additional funds to you.

That is likely to be the cheapest additional money option as no redemption fees etc. Most likely will need a valuation fee (expect that to be sub £200).

If the place you are interested in is at £55k how hard can you negotiate to get that lower?

If family can help you out with the extra to buy the btl then if you are not far off what you need then consider that, but make sure they are well aware that there is a very real risk if things go wrong they will see no money back, so only borrow if they know that upfront.

What contingency do you have? Can you afford to replace a boiler at short notice?

Dont over stretch yourself so do make sure you have a minimum of 3k in savings, ideally 5k.

Can you afford the increased mortgage payment if you have void periods?

Dont forget there will be tax to pay on the rental profit - you can offset related interest against the profit and that will include the increased interest on your main home (but only the interest on the increased amount).

Have you considered the "what if's"

eg you are out of work for a long period, significant fall in house prices, long void periods

Lots to think about so don't rush any decision.

Craig_Donny

Mallotum_X wrote: »

Have you spoken to your current mortgage company?

I'd start off by speaking to them and see what if any products they would lend additional funds to you.

That is likely to be the cheapest additional money option as no redemption fees etc. Most likely will need a valuation fee (expect that to be sub £200).

If the place you are interested in is at £55k how hard can you negotiate to get that lower?

If family can help you out with the extra to buy the btl then if you are not far off what you need then consider that, but make sure they are well aware that there is a very real risk if things go wrong they will see no money back, so only borrow if they know that upfront.

What contingency do you have? Can you afford to replace a boiler at short notice?

Dont over stretch yourself so do make sure you have a minimum of 3k in savings, ideally 5k.

Can you afford the increased mortgage payment if you have void periods?

Dont forget there will be tax to pay on the rental profit - you can offset related interest against the profit and that will include the increased interest on your main home (but only the interest on the increased amount).

Have you considered the "what if's"

eg you are out of work for a long period, significant fall in house prices, long void periods

Lots to think about so don't rush any decision.

Well im currently with Halifax, who ive been told are one of the most expensive.


The borrowing money idea was if I could get it to close apart from £2000 to £3000 or so.


Have thought about the "whats if" for a while and I am confident I will be ok. I can comfortably afford both mortgages and both council tax plus bills with no one renting.
I do have savings for any repairs that may need to be done, and do plan to have a constant savings for as you say things such as boilers.


Seller wanted to list it at £65000 plus (or so im told) and told he is very unlikely to take any less than £55000. However I am going to try, but I think ill be lucky to get 2k knocked off.