Releasing equity from current property to buy a BTL

hottdang1

Hi all

Hoping you can help - I've started a specific thread as I have quite specific circumstances-

I have a property valued at around 235k with a 135k mortgage

I want to release the 100k equity in order to buy one or two BTL properties

Eg 40k deposit against two free holds valued at 120k each thus giving me 30% deposit

(I'd prefer to start with two rather than one aiming to cover any shortfall if one has an empty spell)

I don't earn a big amount 26k and have no savings so everything is on this equity in current property

Can anyone guide me - alternatively I am toying with putting entire equity (less costs) onto one property and so having a reduced mortgage on it?

this is a serious enquiry but I haven't a clue on where to start and want to understand all the angles before talking to my bank (Halifax)

Many thanks

silvercar

You need a broker.

30% deposits is certainly possible. Low income coupled with a new landlord scenario may require careful selection of the lender.

releasing equity from your residential home will depend on the view of the lender. I can't see a lender wanting to give you a 235k mortgage on your income, but maybe a broker knows a different way to slice the pie.

shortchanged_2

Where are you going to find a lender who will give you a 100% mortgage on your residential property?
Let alone what silvercar said. There is no way any lender is going to lend you almost 10 times your income on the residential mortgage.

uncreative

The residential mortgage is already at your maximum (£26k * 5.25) no matter how much equity you have in it so I think it would be difficult on affordability rather than anything else.

I have 3 BTL properties running through a limited company and have a buffer of £8k which equates to 4 months gross rental income and even that is not exactly ideal. I will tell you why: Since 1st January I have had 2 boilers to replace, a flood (insured), new appliances, an electrical short, vandalism damage and a 4 figure factors bill.

I dont want to dampen your enthusiasm but to get into 2 BTL properties on £26k salary when your own mortgage is maxed out and you have no savings (ask yourself honestly why there are no savings) is really asking for grief and stress.

If you are determined to do it, I think you should try to start out with a small 1 bed somewhere and see how that goes.

nrsql

No savings?
What would happen if you got a bad tenant and no rent for most of a year plus a need to refurbish?
What you are suggesting might work (if you could finance it) but you could be risking losing all the properties.

caprikid1

Is the extra mortgage borrowing plus the BTL mortgage really going to be covered by the rent with sufficient space for voids repairs etc ?.


This is a recipe to loose you home.

hottdang1

thanks for the replies - I was actually of this line of thought originally but typically a couple of well intending friends who thought they knew best sent me up the garden path it appears


hence why I came here asking the questions


regards