Raising money against property.

keith7517

Hello.I'm hoping someone can give me some advice.
I have a flat worth around £100,000 with no mortgage or other borrowing against it.My income including rental from this flat is only around £16000.
I'd like to borrow money to buy another flat and use the first flat as collateral.
Are there lenders who will loan me around £80,000 if i put the flat up as security?
Obviously my low income wouldn't allow me to borrow this amount but will the flat reduce their risk enough to lend to me ?
I have a good credit score and history.My only debt at the moment is on 2 of my 4 credit cards.The other 2 cards have a balance of £00.00.

CKhalvashi

How much is the rent on the flat?

Assuming a 6% yield (£500 per month) and a 75% mortgage over 25 years with Natwest (first that came to mind that I know has a calculator), it should be possible to borrow about £75000, not taking into account any income restrictions that NW could have.

Is the money for business? How much business experience do you have if this is the case? If yes and some is the answer to these questions, it should be possible to borrow in a company name, using the flat as a guarantee the loan will be paid, with the obvious expectation that it will be used to cover the debt if this is not the case.

More info needed here.

Pixie5740

It sounds as though what you want is a BTL mortgage on the first property that will allow you to release some of the equity to by another property.

As a general rule of thumb the rent has to be at least 125% of the mortgage repayments and you need 25% equity in the property so I'm not sure you'll be able to raise £80k.

A good mortgage broker will be able to go through your options with you.

jonesMUFCforever

I think you are seriously under capitalised to buy another property.
A salary of what?? if you exclude the rent is what??

dealer_wins

Not the best time to be buying a BTL, when property prices are stupidly high!

Quimoi

50-60% LTV are what BTL lenders are looking for at the moment - once you get above 60% then you are limiting the market.

If you can keep the LTV at 60% or below then your (interest only) repayments are going to be around £100-£150 per month which should be affordable however some lenders will not accept income solely from rental on the property.

A mortgage broker/IFA is your best bet here to to find out your options and tell you which lenders are best for your situation.

jonesMUFCforever

Quimoi wrote: »

50-60% LTV are what BTL lenders are looking for at the moment - once you get above 60% then you are limiting the market.

If you can keep the LTV at 60% or below then your (interest only) repayments are going to be around £100-£150 per month which should be affordable however some lenders will not accept income solely from rental on the property.

A mortgage broker/IFA is your best bet here to to find out your options and tell you which lenders are best for your situation.

You have one in a thousand chance of getting an interest only mortgage especially for BLT.

Quimoi

jonesMUFCforever wrote: »

You have one in a thousand chance of getting an interest only mortgage especially for BLT.

I have two interest only BLT remortgages completing next week. Everything has been arranged by my IFA so I can't honestly say I know how big the market is but I can't imagine they are as rare as you suggest.

Both are at 50% LTV if that makes any difference.

keith7517

Sorry,i should have given more information.The flat i currently own is rented out for £575 a month but should,according to an agent,easily achieve £650.
I make about £140 a week from part-time window cleaning and i own a small shop which has been open for 2 years but is just starting to make some money now so no history of income from it.

Pixie5740

jonesMUFCforever wrote: »

You have one in a thousand chance of getting an interest only mortgage especially for BLT.

Most BTL mortgages are interest only.

Paul_the_Painter

See an IFA, but I don't see a problem in principle. Your need to(re) mortgage the first property to release about 50-55k, and then use this as the deposit on second property also with a mortgage of about 50k.

You'll end up with 2 mortgages and 2 properties. Both with an LTV of about 50%

What you won't be able to do is borrow 90k to buy the second property outright, which in any case would be a bad idea as the interest rate would be much more expensive than having 2 loans at a much lower LTV