3 Year Plan, Buy to Lets and Re-mortgaging.. Help needed..

SSM_2

Hi Everyone,

Just signed up and seen how useful this forum is.:)

However I’m in need of some help regarding my current situation and my proposed 3 year plan.

I currently live in my flat which I purchased for £102000 with an LTV of 85% 2 years ago. When I purchased the property I got a 3 year fixed mortgage which runs out in December this year. My dilemma is that the property value has increased to around £125-130,000 and want to release equity to help fund another purchase or possibly put this on a buy to let getting the LTV down to 75%.

My 3 year plan is to purchase another flat for around the same value with the released equity and savings, put the flat I currently own on a buy to let and save with my girlfriend for a deposit for our own house which will take around the 3 years mark from this month.

I earn close to the £40k mark. I know it’s hard to answer but I wanted to get people’s views on this and whether they think the release in equity is a wise move and how would I go about it?

Would a new mortgage at the end of the year affect my plans to move in with my girlfriend in 3 years, would it affect my plans to put a deposit down on a flat between this period.

Basically I would like to know how other people would approach this plan, with regards to mortgages, length of fixed/variable mortgages, releasing equity to fund an investment, and moving property to buy to lets.

Sorry if this is a bit long winded and confusing.

Any advice would be much appreciated.

Thanks in advance.

Foxy-Stoat_3

How much savings will you put into the new purchase or are you planning on funding the deposit for the second home purely by the £7-9K equity you could release from the current property?

How much will you be able to rent the flat out and how much will the new mortgage payments be, assuming your lender gives consent to let and allows the release in equity?

Do the numbers, best case and worse case, including voids, repairs, re-decorations, associated Landlord costs, agent fees and income tax....does the nett profit seem worth it for the additional risk?

Also way up the possible lower mortgage payments to remortgage with another lender for a lower rate as your new LTV will be less than 70%.

Also think about your current and long term life plan, you could remortgage in December to a LTV less than 70% or LTV of 75% and another mortgage at 95%.

SSM_2

Hi thanks for the reply.

I thought Id be able to release a bit more than that, say 15-20k in December once my 3 year fixed rate runs out. I would also put around 15k towards it in savings with the intention of buying a flat for around £130000. Rental income would be between £650 and £750 a month.

The flat I live in my mortgage payments are 430 a month at a rate of 4.29%.

Do you think this is feasible and will I have to remortgage in December when the 3 year fixed is up? What are my best options.

Thanks.

Dan

stephenni1971

Are you actually an SSM?

SSM_2

That's an abbreviated company name.

Foxy-Stoat_3

Worst case based on your figures, the lender agrees that your flat is worth £125,000, so you'll need maximum 75% LTV, mortgage of £93,750.00 if you want a BTL.

If your current mortgage is £86,000 at the moment then you will only be able to pull £7750 out of the equity. Add 10 months of capital repayments, add another £1000-£1500. Add arrangement/legal fees.

Speak to a broker, as they may have other ideas.