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Getting a Second Mortgage

baz2277
Posts: 49 Forumite
Hi all,
Some advice/thoughts please :
I own a property in South Wales which I rent out - it's worth just short of £100k, with a £59k consent to let mortgage from HSBC.
I now live in the midlands and am self employed. I currently rent here, paying £450 a month, and am thinking about buying up here.
I've been to HSBC recently to inquire about a second mortgage for a property, and they've said I would need to get together a deposit for the second mortgage (as a starting point), which I accept.
Are they not able to use the available equity in my 1st house to act as a mortgage deposit on the second? They didn't really answer the question when I asked, and just replied with needing to have a cash deposit. This will obviously take time to raise, in the meantime my current landlord has mentioned potentially selling the house I currently rent off him!!
Any ideas or thoughts would be gratefully accepted. I do have around £5k saved so far - they also recommended I save rather than overpay my existing mortgage (which I had been doing for over a year!)
Thanks
Some advice/thoughts please :
I own a property in South Wales which I rent out - it's worth just short of £100k, with a £59k consent to let mortgage from HSBC.
I now live in the midlands and am self employed. I currently rent here, paying £450 a month, and am thinking about buying up here.
I've been to HSBC recently to inquire about a second mortgage for a property, and they've said I would need to get together a deposit for the second mortgage (as a starting point), which I accept.
Are they not able to use the available equity in my 1st house to act as a mortgage deposit on the second? They didn't really answer the question when I asked, and just replied with needing to have a cash deposit. This will obviously take time to raise, in the meantime my current landlord has mentioned potentially selling the house I currently rent off him!!
Any ideas or thoughts would be gratefully accepted. I do have around £5k saved so far - they also recommended I save rather than overpay my existing mortgage (which I had been doing for over a year!)
Thanks
0
Comments
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Are they not able to use the available equity in my 1st house to act as a mortgage deposit on the second?
You could raise it by remortgaging the let property onto a formal BTL arrangement, subject to status, rent etc.I am a mortgage broker. You should note that this site doesn't check my status as a Mortgage Adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice. Please do not send PMs asking for one-to-one-advice, or representation.0 -
remortgage with a BTL up to 75% frees you up 15k for a residential on your next property.0
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Thanks to kingstreet and nubbins for really quick responses.
Could you expand a little on what you mean - I understand the Buy to Let bit, but when you say subject to status, rent etc what kind of information would that entail? Are we talking the rent the current tenants pay and their or my status?
They pay £520 a month minus fees which leaves me £467 a month, the consent to let mortgage is £347 a month SVR, so there is spare cash after tax.
It sounds like the sort of thing that a high street bank may not be likely to offer? If it was to release £15k as you mentioned nubbins, what amount am I likely to be offered as a mortgage in this case?
Sorry for more questions, but the BTL option has got my attention!!!0 -
You'll be able to remortgage for the lower of;-
75% of the value of the property
or
the mortgage amount which is calculated from the monthly rent = 125% of the monthly mortgage interest at about 6% per annum.
If the rent is £520 a month, this would support a £83,200 mortgage but if the property is only worth £100,000 then 75% of that, £75,000 is the lower amount you could borrow.
Once the existing mortgage is repaid, you'd have about £16k left over as nubbins said.
You also have to have a clean credit history.I am a mortgage broker. You should note that this site doesn't check my status as a Mortgage Adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice. Please do not send PMs asking for one-to-one-advice, or representation.0 -
So I'm basically remortgaging the property for more than I currently owe on it, this then puts the rest into my bank account as a cash sum and I am free to do with it what I please - in my case use it as the deposit for another property?
Do I still need to go through the mortgage 'interview' I've read about for a remortgage? Where they delve into your incomings and outgoings?
I have a clean credit history BTW!
I've just noticed that HSBC offer BTL as well - I thought they had stopped, any views on their offer? The £2k set up fee is a little off putting the cheaper one looks ok.0 -
Yes.
Only if you go direct to a lender. Most brokers have been "giving advice" for years and manage to build up a picture of their clients without all that drama.
You'll have to ask HSBC yourself what it will and won't do. As my client, I'd be looking for the product with the lowest set-up costs as this is more important than the rate on a smaller mortgage.I am a mortgage broker. You should note that this site doesn't check my status as a Mortgage Adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice. Please do not send PMs asking for one-to-one-advice, or representation.0 -
Thanks so much for the advice - my brain is working overtime now!0
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More than can be said for the HSBC staff who did not understand your question!I am a Mortgage Broker
You should note that this site doesn't check my status as a Mortgage Broker, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice.0 -
I would definately use a broker if you go down this route. Be aware a lot of the BTL criteria from various lenders I have come across also specify that you earn at least 25k. On top of that there will be fees for remortgaging as a BTL which are usually higher than a residential and there will also be fees for your residential which will eat into your potential 15k + 5k. In all honesty it sounds like you need to do a bit more saving depending on Midlands house prices.0
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£50,000 earnings for HSBC, £75,000 for joint applicantsI am a Mortgage Broker
You should note that this site doesn't check my status as a Mortgage Broker, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice.0
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