Raising a mortgage against a let property that I already own

macaulays

Afternoon All,

Quick query, I currently own a property that has no mortgage secured against it that I have had let out for most of the last five years as I lease a property that we live in elsewhere for work reasons. The owned flat is currently empty as I had attempted to sell the property after the last tenancy expired but the local area market is incredibly slow so looks like re-letting is my best bet. Therefore it will hopefully become a let property again in the near future. Is it possible for me to raise a small mortgage (c. 50-60 LTV) against this property and if so, what sort of product should I be looking for? Would it be a 'remortgage' product as I already own the property so no sale will be taking place as such? Would it be a BtL product from day one or would I need to use a residential product first as it isn't currently let and then switch to BtL once successfully leased?

Any guidance as to what category I should be looking for would be most appreciated!

HappyMJ

You can raise a BTL mortgage against it. At 50% it's very likely to be approved without too much issue.

If you're buying another property they would call it a LTB mortgage (Let to Buy) where the equity released and the funds on the mortgage on the property you are buying will be advanced to the solicitor on the day of completion.

macaulays

Thanks HappyMJ, good to hear that it may be possible in principle. One slight sticking point I have noticed in the lending criteria for purchasing a new BtL property is that many lenders want you to be a homeowner already who lives in an owned property prior to purchasing a buy to let. Am i likely to have difficulty with this too as I currently live away in a leased property not owned or does the fact that I already own the letting property as opposed to making a new acquisition help with that? Thanks!

HappyMJ

macaulays wrote: »

Thanks HappyMJ, good to hear that it may be possible in principle. One slight sticking point I have noticed in the lending criteria for purchasing a new BtL property is that many lenders want you to be a homeowner already who lives in an owned property prior to purchasing a buy to let. Am i likely to have difficulty with this too as I currently live away in a leased property not owned or does the fact that I already own the letting property as opposed to making a new acquisition help with that? Thanks!

You'll need a broker in that case. You do not need to be a home owner. Some lenders don't mind if you've also got other income they can use that as well....especially as if you are only borrowing 50% of the property value.

macaulays

Thanks again for the comments. I also wondered whether all lenders ask for the purpose of the funds? At some point over the next year or so I would like to i) purchase a small business that I am currently looking at ii) look at potentially buying a residential property that we could live in rather than renting longer term iii) pay back a loan I received from my parents a number of years ago. I don't intend to do these all at once of course but just wondered if any of these reasons would be deemed 'appropriate' by a lender that asked the purpose of the funds and if so, whether there is one of the above plans I should assign any potential mortgage funds raised to with the others being funded by other means? Thanks!