Is a second mortgage always dearer?

nh

Just out of interest after a converstaion I had with someone today...

Is your second mortgage ie. on a second house always more expensive? Do you always have to put down 25% deposit and pay higher interest rates, or is that only when you are buying to let?

How would a mortgage company feel about someone buying a second property and then letting a family member live in it? Would that be a buy to let, even if they weren't paying any rent?

Dumbledore55

Hi

I only put 5% deposit down when I bought a new house and let my old one out - the Mortgage rate was not too bad - 5.29% for 18 months - used Northern Rock.

Not sure about the bit regarding letting a relative live in it for free - sorry!

DD

herbiesjp

As long as your income can satisfy both mortgages - you can get "normal" rates with "normal" lower deposits - this way having both properties as residential mortgages

nh

So it's only when you are relying on the rental income to pay the mortgage that the interest rate and deposit is higher?

Spendless

Hi

I bought a house in my sole name when I was single. When I married I didn't add husbands name to it (house in neg equity) We had a child and the property was too small for us.

husband bought a bigger property in his sole name for us to live in and I rented my place out.

For the first year I was not charged anymore. In the second year of renting out I was charged 1% more by the Coventry BS.

nh

Spendless wrote:

Hi

I bought a house in my sole name when I was single. When I married I didn't add husbands name to it (house in neg equity) We had a child and the property was too small for us.

husband bought a bigger property in his sole name for us to live in and I rented my place out.

For the first year I was not charged anymore. In the second year of renting out I was charged 1% more by the Coventry BS.

Was that because having a tenant brings about lots of legal problems such as a possible interest over the property, or because you couldn't afford to pay the mortgage without the tenant.

It seems to me to be just an excuse to charge a higher interest rate!

Spendless

nh wrote:

Was that because having a tenant brings about lots of legal problems such as a possible interest over the property, or because you couldn't afford to pay the mortgage without the tenant.

It seems to me to be just an excuse to charge a higher interest rate!

I think the reason they gave me for putting it up after the first year at same rate was that it fetched me into line with BTL properties.

When I initially rented it out the house was in negative equity and we'd failed to sell it.Details that the Coventry BS were aware of. By the time I was asking for permission to rent out for another year the housing boom had happened and there were a lot more BTL about.

At the time I had only a part-time job as my eldest was a baby and my husband paid what was my mortgage (we all lived there as a family), we moved cos the house was too small for the 3 of us. If I'd not rented house out we would have had to keep it up for sale and paid 2 mortgages out of our joint income.

In the 2nd year of asking permission I'd given up work as I was pregnant with youngest so with no tenants hubby would have had to pay 2 mortgages with just his income.

We would have sold it though in that year without problems as property was selling as soon as it came on market.

But yes I agree think it was just an excuse to charge me more