Can I raise funds for BTL using my house as a security?

Michael_S

Hello,
I want to start BTL property business. No incomes yet. No cash. My plan is to use own house as a security. Is it possible at all?

What banks are the best in such financing?

I would appreciate any advice and comments.

Richey_

Why not just remortgage your own house and then buy the buy to let's outright. That way you will not have to use buy to let interest rates which are usually higher.

If I was you I'd confirm you are aware of the higher stampduty on second hones, otherwise lots of people will be quoting that to put you off.

Michael_S

Richey thanks.
I can not remortgage yet my own house as mortgage providers' first question was about incomes and/or accounts for the latest year. But I didn't have them.

hunt85

Lenders won't let you raise funds on your residential home to buy a buy to let.

Richey_

You may well have similar issues I would have thought with a buy to let. As a general rule you will need at least a 25% deposit, plus a plan how to pay when you get a bad tennant or a period of non rental. If you have serious intentions it may be worth checking out a broker or adviser who would be able to give an honest breakdown of costs and relevant advice about the way forward (if it is possible without the accounts mentioned.)

Lilla_D

Correction - most lenders will allow raising funds on the residential home to buy a buy to let. T&Cs apply, but it is more than possible, I regularly do it for clients.

Yes, lenders will want to see evidence of income, so even if the accounts are not yet due to HMRC, the accountant can prepare them any time, if you ask them. Even though some lenders don't have min income requirements, some form and level of income will be necessary for the above mentioned reasons, i.e. to be able to pay for void periods, costs, etc.

glosoli

You are able to raise funds against your residential property however as you have discovered it would be a full mortgage application subject to income proofs and all the rest of it. Your only likely option will be to wait until you have your most recent years worth of accounts so that the lender can calculate your income.

Is your most recent year 2015? When are 2016 due?

Michael_S

So far I was advised to consider a bridge loan... Too risky!
Is it possible that a lender provides 75% of the BTL property and takes charge on my current house (25%)?

glosoli

It's not possible,

Basically, you can get a 75% mortgage on the buy to let property. The additional 25% can be released from your current residential home in the form of equity, so that combined you have 100% of the purchase price. The lender who provides the buy to let mortgage can't just put a charge on your residential property.

Furthermore, in order to obtain the buy to let mortgage, you may be required to produce your accounts anyway to evidence the mortgage is affordable and / or you meet their minimum income criteria which is commonly £25,000.