Advise from 3 financial advisers

Jwilson34ruth

Hi All,

I have been given some financial advice from some financial advisers

I currently have a mortgage on a property in NW London. Recent estate agent valuations value it at 750k. We currently owe 220k on the Santander mortgage. We have a great rate on the mortgage .49 above BOE Base Rate - so dont want to loose that... (Mortgage is portable)

I am a builder and have done a lot of work on my property to turn it from a 2 bed end to a large 4 bed. The house is beautiful now and I am looking for another big project to take on.

Initially I was looking along the lines of selling, then to buy another house slightly out of London for approx 400k that needed work. The idea being to reduce the mortgage in the process. Having spoke to a financial adviser, they suggested the following...

1. Transfer the 220k existing Santander Mortgage to the new house - therefore keeping the great deal of .99%
2. A new let to buy mortgage for 400k would be raised on my current property and this money would be taken in cash so I could use on my second property.
3. The new property costs 400k to purchase. So I would need to put down 180k from the 400 borrowed in step 2 above to fund this purchase. That coupled with the 220k Santander mortgage = 400k

4. That would leave me with 220k cash in the bank to spend on refurbishing the second property.

I have had 3 separate financial advisers that have told me this would work. To me, I wouldnt have the 220k cash in the bank.

I am currently borrowing 220k from Santander on my current property. I would be increasing my borrowing by 400k on the let to buy mortgage. The new house costs 400k, so would I have anything left over to fund the works needed on the second property ?

Thanks in advance for your help...

Richard

vacheron

You would not as far as I can see.

You currently have 530k equity in house 1 (750-220k)

You take the 220k from house 1 in the form of the portable mortgage, and replace it with 220k from a new mortgage.

You now have the 220k Santander mortgage 'in your hand'

You increase the new mortgage on house 1 by £180k bringing your equity in house 1 to 350k (750k minus the new £400k mortgage)

You have another £180k in your hand.

You now have 400k in hand to buy house 2.

It seems to me the advisors are forgetting that £220k needs to stay in house 1 to maintain the status quo.

getmore4less

They have the order wrong.

1. Raise £400k on old place BTL.
2. pay off £220k mortgage leaving £180k cash.
3. Port deal to new £220k mortgage and add £180k cash to buy £400k place
4. no cash left £620k of debt.

AnotherJoe

getmore4less wrote: »

They have the order wrong.

1. Raise £400k on old place BTL.
2. pay off £220k mortgage leaving £180k cash.
3. Port deal to new £220k mortgage and add £180k cash to buy £400k place
4. no cash left £620k of debt.

If the OP pays off the 220k mortgage in step 2, they cant port it in step 3 to retain their good deal.

ThePants999

Not true. "Porting" a mortgage always involves paying off the old mortgage and taking out a new one; "porting" just means that the lender will give you identical terms on the new mortgage to what you had on the old one.

kingrulzuk

Jwilson34ruth wrote: »

Hi All,

Just a quick question.

I have 54k in the bank and looking to put it into some good use...

What I am looking to do is buy and sell shares on the same day. So lets look at the following example....

Lets imagine I was to buy as many of Lloyds banking group shares at 0.67p each. I would be able to buy 80,597 shares. Then on the same day I was to sell them for 0.71p each. I would have made a profit of £3223 (obviously minus trading costs etc)

What would be the downsides of doing such a thing ? and is it possible ?

Thanks,

James

I see that you got so much going on in your life. Relax

AnotherJoe

ThePants999 wrote: »

Not true. "Porting" a mortgage always involves paying off the old mortgage and taking out a new one; "porting" just means that the lender will give you identical terms on the new mortgage to what you had on the old one.

I stand corrected, thanks