Home owner looking into BTL

scj1234

Hello

My name is Stuart, I currently own a home which is valued at 180k, my current mortgage is 134k remaining. I have 46k equity in it. my salary is 26k and wifes is 19k with zero dependents and a healthy amount of money left over each month.

We are looking into a BTL, 2 bed terraced property priced around 50k, rental on it is around 500pcm in the market.

We have around 5k in savings, and alot of money put away in pensions however we were hoping to possibly use equity in the house to fund the deposit for the BTL rather than savings.

Can anyone provide advice as to generally how much equity we can release and would you recommend gong through our current mortgage provider or use a broker? and also advise if there is anything else usefull we should know going into this whether is is possible at all?

Look forward to hearing from everyone.

Regards

Stuart

Lilla_D

Hi Stuart,

In one of your earlier posts you indicated that your HSBC 2-year deal was finishing in May 2017. Have you taken out a new deal with them or with anyone else? If so, you'll have to weigh up the costs of remortgaging with someone else to raise money vs taking a further advance from your current lender.

Capital raising to use the money as deposit for a BTL is generally allowed, although some lenders want to see evidence of what you're buying before they give you the money. You're currently at 74% LTV, so dependent on the lender, you could increase your mortgage up to 80-90% LTV, i.e. £144k-£162k. This would give you £10k-£28k to spend on the new property (minus any ERC, fees and costs of course).

If HSBC can offer this to you direct, then that's fine, otherwise you may want to speak to a broker who can review even the details that are not in your post above and help you find the best option both for releasing cash and for the BTL mortgage.

I guess you're aware of the 3% stamp duty on the £50k property, the taxation rules on rental income, etc.?