Buy To Let & Releasing Equity

DaManUK

Last year I moved out of my property and rent it out on a permission to let and moved to my girlfriends. I’m currently not on the mortgage at the new place. My mortgage is up for renewal and I’ll be looking for a Buy To Let for my property.

I only have about 60k left on the mortgage and the property is worth 3 times that. I want to release 20k equity for a mix of things.

I have been to a broker who says around 3.5% is available for five years. One broker said the difficult thing for me will be releasing equity.

My credit rating is superb and apart from the mortgage I have a car loan and that's it.


The rates I’m seeing at 2% -3% from searches but I’m guessing I may not get those because of the equity release? What should I say the reason is for the additional borrowing if it’s a mix of holiday, possible extension etc.


HSBC have the lowest rate, is that a longshot?


I personally think I’ve a good scenario but I’ve been made to think otherwise?

Thoughts please.

foxy-stoat

I would direct your questions to your choosen broker and tell the truth.

They will be in the best position to advise you.

dimbo61

Are you a higher rate tax payer ?
What are your long term plans with the property.?
Will you want to buy a place with new partner ?
Pension, age, savings etc all need to be considered
Broker if you want a BTL mortgage

marsman802

On the face of it I can't see too many barriers to the ability to do it.

As long as your rental income works out at 125% of the mortgage interest @ 5% (some lenders will go more but 5% is a good average according to my broker and I've just done what you want to do - in my case to fund a bigger residential purchase) then you can likely proceed as long as you leave 25% equity in the property. I'm leaving 35% equity and the there's a lot of room above the 125% test above.

Factor in any ERCs and other legal costs.

Photogaz

Thanks for the replies so far. I'm not a higher rate tax payer. My partner already has a place but at the moment I can't be added because she's already in a mortgage.

Thrugelmir

Releasing equity isn't as straightforward as it may appear. A property is not an ATM. Lenders will have internal policies to ensure that they conduct their business in an affordable and responsible manner. If you don't own any other property then your choice of lenders reduces somewhat.