A few questions around mortgages

mamz001

Hello,

I have spent some time online trying to research my situation but haven't had much luck, hoping someone can shed some light on here.


I currently have a mortgage solely in my name which is in a fixed term plan.

My partner and I currently live in my property along with my parents, both of us have been saving up so we can move out but the property will still be under my name and my parents will live in it. My parents can't get a mortgage due to affordability rating and bad credit score etc but they do contribute towards the costs. This mortgage is currently a residential mortgage.

The fixed term mortgage will come to an end near the end of July, but my partner and I are planning to purchase a property at some point next year. Savings alone won't be enough so I will need to do additional borrowing from the equity in the current property. I know the mortgage would then increase but we can cover those costs.

My question is if my partner and I buy another property will it be deemed as a residential property? The current property which I own is a residential property and my parents will continue to live in it, they will pay most of the mortgage with me helping them out a little.

Also since the fixed term mortgage comes to an end July, I am thinking it is not wise to get into another 2 year fixed term mortgage as I will need to do additional borrowing at some point next year to help with the deposit of the new property, would the best option be to leave it on the standard variable rate (I believe there's no fee when remortgaging for a better rate at that time)?

Currently I am on a rate of 2.4% but going on the variable rate will be about 4% so will cost me extra a month (by £250 or so). Or would it be better to do the additional borrowing come July and get into a fixed term mortgage, that way I won't need to borrow in the near future but it would mean my mortgage payments would be significantly higher.

Last thing is around affordability, I am on a salary of 45k, my current mortgage is 165k, the bank already said I can borrow up to 200k on my existing mortgage (so additional borrowing of 35k). Baring in mind I have a residential property already, if I do end up purchasing a new property for around 300k is this achievable (deposit will be around 20%)? My partner's name will also be on the mortgage and she is on a salary of 40k.


Thanks for reading I know it's quite a lot, any help would be highly appreciated.

Thanks Guys.

kingstreet

Affordability for your next mortgage will be affected by the payments for the current one. Your parents' contribution will be ignored.

You will also fall foul of the 3% SDLT surcharge as your current property will be retained and your property portfolio will grow from 1 to 2.

foxy-stoat

Your current mortgage will have to be replaced with a regulated buy it let - speak to a broker. This will need to be maximum 75% LTV and the rent you will get from your parents will need to be at least 25% more than the mortgage payments. You will need to buy landlord insurance, register with HMRC and put money aside to pay income tax on the rental profit and get a fresh EPC.


Find a local whole of market broker and go from there.

kingstreet

foxy, a good few lenders will allow you a residential for parents to live in and trying to get a regulated BTL means affordability based on personal income not rent anyway.

mamz001

kingstreet wrote: »

foxy, a good few lenders will allow you a residential for parents to live in and trying to get a regulated BTL means affordability based on personal income not rent anyway.

Yes I spoke to a broker and he said the same you can have two residential mortgages. I thought buy to let would be easier to do, if it won't take into account rent and only affordability then I probably won't be able to move out as my salary of 45k would pretty much be maxed out against borrowings on my current property.

I am just thinking come July what to do with the current mortgage, sorry I seem so confused, this is my first property and I am pretty new to all this.

kingstreet

Why not speak to an independent broker and have them assess all the possibilities with/for you?