Want to buy a second property - advice needed !!

kelis_2

Hi, am hoping I'm in the right place for some advice. My husband and I would like to buy a "doer-upper" second property, to either renovate and sell on, or renovate and rent out. Our own home is worth around £450k, and we have a mortgage of around £40k due to finish in 6 years. We have around £20k in savings. My question is, what are our options for financing the second property ? Do we re-mortgage our current home ? Do we apply for a buy to let mortgage (which I believe requires a 25% deposit ?) And I am led to believe most lenders will only lend if the property is "let-able" immediately, which ours wouldn't be as it would be being renovated. Is this correct ? Any advice appreciated. Thanks

jackomdj

IMO I would remortgage your current property and use the money to buy the second property. If you do let it you can clain the interest on the other mortgage, as long as you can prove that you raised the funds to purchase the btl property (which is what our accountant does with our btl)

Using a residential mortgage it will, in most cases, be at a lower interest rate tgan a btl mortgage.

amnblog

There are a number of ways to do this with implications and benefits for each.


Best to get some one to one advice.

Thrugelmir

If your total cash savings are only £20k. Then is property investment the right thing to be considering at the current time. Perhaps better to focus on clearing your existing mortgage first.

ACG

There are a few ways of doing it, all have their pros and cons.

A BTL mortgage is a mortgage for a proeprty you intend to buy and let out, not buy do up and let out - Its a common mistake. There are a couple of products that do not mind you doing some light refurbishment (but that is decorating etc, not knocking down walls etc).

You can get developement finance. This will be more expensive but you can allow the interest to roll up so it helps on cashflow.

Another option would be to raise the money against your residential property and buy the new property outright.

It could be worth speaking to a broker to go through the different options.

Dont get too put off by the rates/fees. They are usually tax deductable so its not necessarily a bad thing paying a higher rate if the product works better for you - but (my get out clause) consult an accountant to be sure.

bluff27

Is this possible? So far 2 accountants have told me not poss but I feel it has to be! Is it best to see a tax advisor or accountant to find out?

uncreative

You need to remember that you are raising the capital to buy a BTL property against your own property, thus increasing the risk.

You need to get advice for this and do a mini business plan/feasibility study; remember you are doing this to make money and not add too much risk to your PPR.