Mortgaging a second property

Henry2016

Good afternoon

I currently own a house outright that's worth around 250k.

I currently earn about about 29k a year and was looking to get a mortgage to buy another property.

Question is how much of the first property can we take out to get a second home. The banks will only lend me about 90k so would I be able to use around 120k from the first house as a deposit?

Not really sure how it all works

kingstreet

Where will you live and to what use will the other property be put?

Henry2016

We would live at the new property and our daughter would live in the existing property

kingstreet

Ok, so with no rental income from letting, the only money you can borrow is going to be based on what income you have declared.

You can raise money in two ways, you borrow it, or you sell assets. There is no other way this can be achieved.

Henry2016

Okay so the banks will lend me 90k as it is. So the owned property is not worth anything in regards to a new mortgage?

kingstreet

No. What you can borrow is governed by affordability.

The only use for an asset is what you can sell it for, or what you can borrow against it. On the latter, see the first sentence.