Best mortgage type?

getmore4less

mikeopvc wrote: »

Hi, thanks for the reply

It's our first one so figures are small but like I said its our first one.

£75,000
£10,000-£15,000
£5,000
6-8 weeks
£105,000-£110,000
Buy to let mortgage if not sold within 2 months, use profit of rent to mortgage to cover early repayment charges and sell in twelve months

Don't forget the income tax as this will be a property development business.

mikeopvc

I'm told I won't be able to get a buy to let mortgage as the property is not in a habitable condition, this means a bridging loan is my only option.

The value increase would be down to the new kitchen, new bathroom, double glazing throughout, new fascias, soffits and guttering, possible new garage or conservatory.

So is the remortgage part ok to go ahead with in your opinions as I'll be paying less per month straight away on that?

Cornucopia

The only reason for not applying for the remortgage now is if it restricts your options later.

getmore4less

If you want to do this regularly it might be worth looking at an offset mortgage on your main property to act as the cash flow buffer.

mikeopvc

Cornucopia wrote: »

The only reason for not applying for the remortgage now is if it restricts your options later.

OK thanks, how would it restrict my options later?

mikeopvc

getmore4less wrote: »

If you want to do this regularly it might be worth looking at an offset mortgage on your main property to act as the cash flow buffer.

OK thanks, how does an offset mortgage work exactly?

Cornucopia

mikeopvc wrote: »

OK thanks, how would it restrict my options later?

Once you have gone with a residential mortgage on your main property, it would be tricky to change it to something else in a short time-frame.

That something else could include:-

- An offset mortgage, as above (which is quite a good idea).

- A Let-to-Buy mortgage, if it turned out that this was the only feasible way to do what you want.

- A secured loan.

I'm left wondering about the viability of your project overall. I have questions, which you do not have to answer, but might help set your financial questions into context:-

- Why this new property?
- Why now?
- Are you planning to do all/most of the refurb yourself?
- Are you already operating a building trade company?

mikeopvc

No problem, I'm happy to answer any questions as I'm looking for as much advice as possible.

Hopefully this property will be the first of many as I'm keen on building up a small portfolio

Now is the first time I've been able to afford it as I've just finished paying off all my credit card debt

I'll be doing everything except any electrical or gas work

I've had my own company for 12 years

Cornucopia

Thanks, that makes sense.

My suggestion would be to find a different new property, such that it is capable of having a BTL mortgage raised upon it. I appreciate that that may make it a less lucrative deal, but it should also reduce the risks.

mikeopvc wrote: »

OK thanks, how does an offset mortgage work exactly?

You have a current account or saving account in parallel with the mortgage so that you can flexibly access mortgage funds when you need them, but offset them when you don't so that you are not paying interest on them.

mikeopvc

If I do get a buy to let then won't that mean I'll only be able do one property up as I won't have a deposit for another one?