Advise please - Want to free up cash for second mortgage

lectrofrog

Hello,

I need some advice. I bought a house in London with a 10% nationwide 2 year fixed term first time buyers mortgage at £245,000, the mortgage is now at £210,000. This fixed term is up in March 2016 and I am looking to move to another city. The house has recently been valued at around £400,000.

Rather than simply sell the London property and buy in another city I was thinking of keeping the London property and getting a 2nd mortgage, and then renting out the London property. The problem here is that I understand you need a 25% deposit for a second mortgage (which I don't have).

Is there a way of freeing up some money from the increased value of the first property to get a 25% deposit for the second? Would I simply approach Nationwide for a new mortgage at £270,000 and then use £60,000 for a deposit on a second mortgage?

Thanks

kingstreet

You seem to have several different issues muddled together, so I suspect your best first port of call should be to a decent mortgage broker.

What you are looking to do is a let to buy and onward purchase.

You will remortgage your current property onto a let to buy product. Provided the rental income is sufficient, you should be able to remortgage to £300,000 (75% of the estimated value) leaving you around £90k in hand after the current mortgage is repaid.

You are then looking for a purchase mortgage with a £90,000 deposit available, plus any savings you want to put in, less any fees. Choose a lender which will ignore the let property/mortgage in the background as self-financing and be aware of lenders offering a lower maximum LTV for the onward purchase. You will not NEED 25% deposit.

amnblog

As Kingstreet says, if your current property will rent for £1500-1600pm you are in business Lectrofrog.

We do these kind of arrangements with our Professional clients every week.