Switch main property to BTL and buy new residential property

Avicov

Afternoon all,

I am looking at buying another property to live in but want to keep hold of my current property.

So here is the scenario:

Current property value £590k
Mortgage remaining is £330k

I want to release £100k from my current property to use as a deposit for a new place to move into.

Can I easily switch my current residential mortgage to a buy to let mortgage and get a new residential mortgage for the new place we will live in?

Rental is £1900 for my place and mortgage on a buy to let interest only would be £1100.

My current mortgage is with Halifax so wondering as well if it’s easy enough to switch to a buy to let deal. My 2 year fixed residential mortgage expired a few months and I haven’t renewed to date.

Look forward to your replies.

Thanks!!

silvercar

How much will the new property be worth? Need an idea of the LTV on the new place to see if the deposit is enough for lenders.

amnblog

Your rental is not high enough to easily raise the figures you suggest.


Most Lenders will offer between £276,000 and £356,000


Engage a good mortgage broker.

Avicov

silvercar wrote: »

How much will the new property be worth? Need an idea of the LTV on the new place to see if the deposit is enough for lenders.

New property would be £750k


£100k raised from remortgage of current property to BTL plus £130k savings. So in total £230k deposit for new home.

kingstreet

The rental income is only just enough to cover the current £330k mortgage. You are going to struggle to get another £100k on top of that if it will only rent for £1,900 a month.

I used a lender which uses 125% @ 5.5%. Many use 125% @ 6% and that would mean you can't even remortgage onto BTL for the current amount as £304k would be the most.

Avicov

Maybe there is something I'm not understanding here.

If my property is worth £590k and I want to move from a residential mortgage to a BTL, do I not need to have 25% equity for the mortgage?

So if I have £330k mortgage outstanding can I not increase my mortgage amount to £442k which leaves me with 25% equity to transfer it to a BTL?

Virgin Money for example are offering 2 yr fixed at 2.89% which gives a monthly payment of £1062.

Average rental income for my property is £1900.

So 125% of £1062 is £1327

GMS

Most lenders would use a notional interest rate for their calculations.

There MAY be options at the actual rate but it will mean limited choices.

Engage a broker.

Cornucopia

Virgin's notional pay rate is 5.99% - meaning a maximum loan of £304k as mentioned above.

Avicov

So the BTL is always calculated on nearly 6% and not the actual rates on offer?

Cornucopia

Each lender has their own rules. That's where a broker might be able to help.

GMS

Avicov wrote: »

So the BTL is always calculated on nearly 6% and not the actual rates on offer?

You mentioned Virgin who use 5.99%. All lenders choose how they calculate.

There are products available where the actual interest rate is the calculation so if you are determined to do it then you MAY be able to do so.

You need a broker.