Let Mortgage Confusion

reasonableman

I am trying to sort out a mortgage issue and struggling to get any sense out of my bank, Natwest.

My goal is as follows: I own a flat with a residential mortgage that I let out (I have consent to let). Rather than sell this, I would rather remortgage it and use the capital to add to a deposit to buy a house with my wife.

I have spoken to Natwest three times and got three different answers:
1) That's fine. We can re-mortgage as a residential mortgage and continue the existing consent to let. The funds raised could be put towards a deposit.
2) It would be necessary to re-mortgage on a buy-to-let mortgage but then we could proceed as usual.
3) They would not ever re-mortgage on a property with consent to let and any funds raised via re-mortgaging would count as debt and not be admissible as a deposit.

Personally I thought the 2nd answer was the one I expected. I am now, however, confused.

I would appreciate any comments people have...

Thrugelmir

Combination of 2 and 3.

Until you apply or make an "official" enquiry you won't know.

silvercar

So you are talking about increasing the mortgage on the flat to fund the deposit on the next place. That is what some lenders have issue with. It may be as simple as remortgaging as a BTL with NatWest and using the extra funds raised as a deposit with a different lender who does allow money raised in this way to be used as a deposit.

(3) means they won't release funds by way of consent to let on a residential mortgage. ie you can't increase such a mortgage.

You could do (2) and then put that money released in a savings account until you are ready to buy. That does mean you are paying the mortgage on the higher amount straight away, but at least you know you have the money available to you.

reasonableman

Thanks for the comment, although what do you mean by make an "official" enquiry?

I was sent an 'Intention to lend' letter after the 1st conversation! The second was supposed to be processing the application.

My key concern is that the capital raised by re-mortgaging might not be admissible as a deposit. Unfortunately that is the second step so I can't apply for the second mortgage until I've done the re-mortgage. I am going to contact the bank again and am looking for a Mortgage adviser but it's always nice to hear more opinions.

reasonableman

silvercar wrote: »

It may be as simple as remortgaging as a BTL with NatWest and using the extra funds raised as a deposit with a different lender who does allow money raised in this way to be used as a deposit

My main concern is that most lenders may not accept this but I've not seen it mentioned very much. From my research most people that use a re-mortgage to generate deposits are increasing a residential mortgage to fund a buy-to-let purchase. I'd be doing it the other way around; I'm concerned that this will involve additional charges/higher interest rates.

reasonableman

I thought I should mention another option, although it seems rather convoluted to me, but does make the process more 'typical'.

As I say, I am the sole owner of the property. I could sell it to my wife at the market value and raise capital that way. It just seems crazy that capital raised this way is different to that raised by a re-mortgage!

amnblog

4. Ask a mortgage broker to sort this. Nat West's direct team is not the right place to get the solution you want.