Re-mortgage to buy2let - help needed

MrXYZ

Hello

I have recently had an offer accepted on a 3 bedroom semi detached house in Birmingham. The house is near main bus routes into Birmingham City Centre, Solihull the Airport (although you can’t hear the plans and the house is not in the flight path), NEC and a number of hospitals.

My mortgage is a 113k (first time buyer) and I am buying the house as a fixed rate mortgage that I secured before the two recent rate rises. The mortgage is interest only and works out at about £550 a month.

The house does need work doing to it, it needs a rewire, central heating and decorating, new kitchen is needed. There is already double glazing in the house. The house has not been extended although the potential is there to do so.

The other properties on the road tend to sell for around £150k - £160k when extended.

The houses that are not extended tent to sell for between £140k - £148k

According to the Estate Agent they extended houses rent for around £600 a month unfurnished and the un-extended ones between £500 and £550 a month.

That is the background to the property. Now here is my situation, I put an offer on the house, expecting to be living in Birmingham. However, my personal circumstances have changed and I may be moving overseas within the next 3 months.

I think the house is a good opportunity at the price, however what I am unsure of is it still feasible for me to purchase.

At the current time I would own 86% of the property due to my deposit.

However if I renovate the property and lets say it’s then worth £141k I then own 80% of the property due to the increase in value of the house.

Now if I still purchase the property my main questions would be:

If I was to re-mortgage and change to buy to let in 3 months, I would ideally need to own 80% of the property to get some of the better value deals:

Therefore, would the mortgage lender base a potential buy to let mortgage on?

What I originally paid for the property 131k and a loan of 113k?

Or

The value of the property after I carried out the renovation (141k for example) and a loan of 113k?

If anyone can answer I would be very grateful, also if anyone has any further advice to offer I would be grateful, even if it’s pull out of the deal etc


Thank you

J

silvercar

If you were remortgaging with a different company, the new lender would arrange a valuation so it would be based on the then market value.

If you went to your current lender, the easiest option would be to ask for "consent to lease" which would mean the lender allowing you to rent the property out on your current deal. If the lender said you would be required to move to a BTL mortgage, you could request (and sadly have to pay for) a re-valuation.

herbiesjp

Does the current deal you have applied for have penalties ie are you tied in for 2 years?

MrXYZ

Tied in for 3 years and an exit fee of 3k