Maths Muppet in Mortgage Muddle - please help!

DeNovo

Hello All, as the title suggests I have a mortgage query and need advice on the best way to proceed. My husband and I are looking to buy a rental property for £90,000 and the house comes with regulated tenants so we are limited to a few lenders in the first instance. We are struggling to get enough deposit to enable us to have better than 80% LTV and have been offered (in principle) a £72, 000 loan with 4.99% (plus fees). If we can get bigger deposit and then have 75% LTV we have been offered (again in principle) a 1.79% product which is obviously better. However as I mentioned we will struggle to get £20K plus required for the deposit. I have been wondering if we could get a personal loan of say £10K at approx 2.8% and put this towards the deposit to take us into the better LTV bracket?! My rudimentary maths skills cant work this out! I know the monthly repayments with the loan plus mortgage would be high until loan paid off but would this be financially better over long term? Or is this a ridiculous idea as having say a £10k debt would go against if we wanted to remortgage in future? Should we just go for the higher rate and suck it up for a few years? The house is one we really dont want to miss out on and the circumstances around it are quite unusual so we are willing to take a hit initially. We have a residential mortgage in place so this would be an additional property, however I was told by the mortgage broker that the lenders of the 1.79% mortgage would treat it as a second home not a buy to let (?!) I have tried to calculate all the varying scenarios over say 20 years and say if we fixed for 2 years but its beyond my comprehension! I'm counting on you guys!......

TrickyDicky101

Do you mean the tenants currently have a regulated tenancy? In which case why on Earth do you want to buy this place? Do you have an experienced broker who deals with regulated tenancies? If not I think you need one as the circumstances of a regulated tenancy will likely restrict the pool of lenders available.

DeNovo

Yes it does have a regulated tenancy, we are aware it is unusual but we do want to proceed. I'm using London and Country brokers.

TrickyDicky101

L&C are not specialist brokers so may well have no real idea who they should approach for mortgage deals in your circumstances.

Why do you want to buy this place? As it has a regulated tenancy you can't increase the rent or kick the tenant out (except in very restricted circumstances) and even if they die the tenancy could be inherited.

What benefit would you derive from owning this property?

DCFC79

Didn't think you could use a loan for what you describe OP ?

You will be asked to provide proof of said deposit.

DeNovo

My parents have lived in this house for 40+ years, the owner is now selling and I want to buy it as it's my family home and I want my parents to have security.

DeNovo

I have been told I can get a mortgage on it - I just want to know which one to choose!

TrickyDicky101

DeNovo wrote: »

I have been told I can get a mortgage on it - I just want to know which one to choose!

By L&C who aren't regulated tenancy specialists. To add to that, it's a regulated BTL you need (as distinct from a normal BTL) as it's your parents who are living there!

L&C are not the right people for you here in my opinion.

Anyway, I can't add anything further. But you really do need to ensure you will get the mortgage given the particular circumstances.

Joe_Bloggs

DeNovo:-

My parents have lived in this house for 40+ years, the owner is now selling and I want to buy it as it's my family home and I want my parents to have security.

Are your parents the tenants ? There may be rules and lending guidelines concerning family members that may stand in the way.
J_B.

DeNovo

Can anyone else advise please?