remortgage to buy another house

izgo

Hi all

I currently have a mortgage on the property I'm living in. The property is worth £130,000 and my mortgage is £90,000. I'm pretty sure I can't just remortgage the property and use the £40,000 equity I have to use as 100% of the deposit for a second home. How much money from my own savings must I also put down to make this work?

Contemptuous

Releasing £40k equity in your current home would mean a 100% mortgage and I can't see that really being an option - 90-95% would be the maximum.
Otherwise, I believe you could use the equity as a deposit for a second property without having to put in any of your own funds - if anyone knows otherwise please correct me!

carlx

As previously stated you will need to keep a minimum of 10% equity in your current property which means in theory you could release £13,000 from your home.

As a standard, buy-to-let mortgages require a minimum of 25% deposit which means you could buy a buy-to-let property at a value of £52,000.

That is also assuming you have the funds to pay for conveyancing, agent fee's, survey's etc, otherwise that £13,000 could be more like £9,000-£10,000 and unless your buying in a pretty run down area, you will really struggle to get a hold of a property in the price range that you can afford.

Thrugelmir

izgo wrote: »

How much money from my own savings must I also put down to make this work?

Do you have sufficient capital to make it work? Simply taking a punt is a recipe for disaster. Something which gambling your home for requires serious thought.

amnblog

You have not explained why you are looking to take this course of action?


There may be other ways to achieve your objective.

izgo

My plan is to buy a second (slightly larger) home for me and my wife to live in, and remortgage my current home as buy to let.


By the sounds of things this might be more difficult than I previously thought.

Thrugelmir

izgo wrote: »

By the sounds of things this might be more difficult than I previously thought.

If that's you aim you need to get saving and build up far more capital. You appear well short of the target at the moment.