Best way to extract money from BTL?

kempstar

Hello

We currently own and live in our house, we remortgaged six months ago. The house was valued at £640k, the mortgage was for £415k.

We are expecting another child, so we are looking to move to be closer to family. However we want to avoid selling the current place if possible. We have spoken to Furness building society, they would be happy to give us consent to let, this may involve moving over to a BTL product.

We also own a rental property, this is in my wifes name. This is three years in to a 3.5% fix. It is a residential mortgage, but with consent to let. The flat is worth approx £320k, the mortgage is £140k.

What I wanted to know is, would it be possible to remortgage the rental property to help with the deposit for another property to live in? So we could keep all three. I have looked at the numbers, and even if we remortgaged up to 75% on the BTL flat, the rent would still easily cover the mortgage and make a nice profit each month. Plus that would give us £100k or so towards the deposit.

One potential issue is that my wife no longer works, whereas she did when we lived in the flat. I am self-employed, income is approx £120k per annum, and my wife is also a shareholder in the business, so she does have an income, but she is not employed.

Many thanks in advance

kempstar

One important thing I forgot to add! The mortgage on the flat is with Santander. I think the ERC is 5% which is very high unfortunately. Perhaps it goes down each year of the mortgage, my wife is going to ring to confirm.

Santander have some decent BTL products, but only via broker by the looks of it. If we switched from a consent to let with them to a BTL with them, would we be able to avoid the ERC?

kempstar

Can anyone help?

Annisele

I think this is a "maybe" - and it sounds to me like a job for a broker.

In theory you could borrow more against the flat (the one worth £320k), but its very unlikely you could borrow more on your wife's current consent-to-let product. She'd probably need to switch to BTL, and whether she can do that (and whether it would release enough) depends on a great long list of factors.

Different BTL lenders have very different lending criteria, and some of them only deal through brokers. For example, some require the borrower to earn a minimum of £25k. Some require the borrower to own a residential property elsewhere. Some have restrictions on age. Some won't lend on ex-council flats. Etc.

I don't think you'll be able to avoid the ERC if you switch to a new product. You could always ask, but I'd be very surprised.

kempstar

Thanks for replying. I think what we are most likely to do then, is to try and remortgage the flat into both of our names, which should get around most if not all the problems you mention.

jayson043

Don,t be a buy to let novice. It's a large property for buy to let. Say house prices fell by 5% and you needed to refinance, you may find yourself unable to meet a lenders criteria and end up going onto a standard rate or having to find a lump sum to get back to a 75% LTV. Also can you cope say with 2-3 months of voids et etc.