Remortgage/Buy-to-Let Query...

GT85N1

I bought my first place just over 10months ago.

Now me and my girlfriend are about to buy a place together. Plan is for me to get consent to let my flat.

Thinking a little down the line however -

When my 2 year fixed period expires - how would it work if I wanted to remortgage my flat?

The reason I ask is that in the 10months I've had it, it's gone up in value approx £50k, and will still keep going.

How does a remortgage work where the value has increased like this? Would it mean I'd be able to release cash from the property?

And what about the mortgage then becoming a fully fledged buy to let.. any impact? I know the rates etc but I mean anything else to consider?

Thanks

Typhoon2000

If you remortgage it will have to be as a buy to let, as you wont be living there.
A remortgage is essentially getting a mortgage from scratch from a different lender. Typically you borrow just enough to pay off your existing mortgage. But if the figures add up (rental cover etc) you can borrow more and use the extra as you see fit.

GT85N1

Thanks.

I understand that it will be a buy to let - I'm more unsure on the way the numbers would work on the remortgage..

For example -

I bought at £194k, I put £10k down as deposit.

I've been advised by estate agent that it would currently sell for around £245k - and still rising. The area is crazy at the minute, Crossrail is bumping prices up at a serious rate.

I know if I was to sell then I have effectively 'made' the extra £51k..

What is the remortgage scenario? i.e. can I use this increase in house price to my advantage? (without selling that is)

amnblog

The value is what it is at the time of remortgage.

It is as simple as that.

Caz3121

GT85N1 wrote: »

T
I bought at £194k, I put £10k down as deposit.

I've been advised by estate agent that it would currently sell for around £245k - and still rising. The area is crazy at the minute, Crossrail is bumping prices up at a serious rate.

What is the remortgage scenario? i.e. can I use this increase in house price to my advantage? (without selling that is)

BTL mortgages are typically 75% LTV....if your property is valued at £245k at time or remortgage, you will be able to have a mortgage up to £183,750...
If your mortgage at that point in time is less than this then you may be able to pull out the equity and take a BTL for 75% of the valuation
If the current mortgage is more than the 75% LTV then you may need to pay the difference yourself

_CC_

GT85N1 wrote: »

And what about the mortgage then becoming a fully fledged buy to let.. any impact? I know the rates etc but I mean anything else to consider?

If you release cash from your flat you'd have to consider the remaining LTV and if it meets lenders criteria (plus the personal choice of effectively increasing your leverage).

Once your flat becomes a BTL you'll obviously have the things that come along with that; including the changes recently bought in at the budget regarding offsetting the mortgage interest against rental income being limited to the lower marginal rate and the scrapping of the 10% wear and tear allowance. All the value increase you're expecting will also be subject to CGT, if realised.