Releasing equity to buy another property help...

localboy

We have a property worth approx £150k, there's no mortgage on it, we own it outright. We are currently and have been for the last 8 months, renting it out for £650 p/month. We are looking to remortgage it, say borrow £60k over a short period, ie 10-12 years so that the rental income will cover the mortgage payments. With the £60k we intend to buy another property to rent out.
What kind of mortgage will this be classed as? Where's the best place to look for deals?
Thanks in advance.

Mortgage_724433

As long as you don't reside in the property and the tenants are not family members, this would be classed as a buy to let mortgage. Following changes earlier in the year there are two differing types of buy to let, 'consumer' and 'business'.

You may want to speak with a whole of market mortgage adviser as they can ensure you're matched to an appropriate lender, and that you're circumstance is packaged accordingly.

Daniel

Phil_H_MLIA(dip)_Cert_PFS

The deals available to you may not be the most important matter here. Ensure that you are aware of the recent changes to SDLT, specifically the 3% surcharge and also the proposed (and likely) changes to rental income taxation being run in from 2017-2020.
As such, your mortgage "shape" could be at least as important as what deal you can achieve.

Even with pending changes, some mortgage styles or shapes will be less tax-efficient than others.

In terms of availability, it will depend upon your overall employment/income status as remarkably few lenders will now offer a BTL mortgage on a purely self-financing basis. Some have minimum (no-rental) income thresholds that apply even when the rental-stress calculations are not an issue.