Advice about possible BTL and current mortgage

moneypenny21

For a number of reasons we are considering a buy to let mortgage on a second property. We have about 2-3 years left to pay our current mortgage off. LTV is about 10% as house price has gone up and we will have repaid it about 10-12 years early due to overpayments. We were happy to have (soon to be) the financial security of not having a mortgage to pay.

We have considered a BTL for a number of reasons which I won't go into but one of them is in place of a pension as I don't have one. I'm not a big risk taker so the idea of taking on a new mortgage is like starting again.

I'm not up on mortgages at the moment, having had a quick Google, seems like we will need a massive deposit for a BTL mortgage.

If only the opportunity had arose once our other mortgage was paid, maybe I'd feel it was less of a risk. We would definitely have a tenant straight away.

I did wonder if we could remortgage our current house to raise a better deposit for the BTL? That way we would have a better rate on both. Any thoughts? Is that even something that can be done? Can we put £40k on our current house to raise a deposit for BTL? That way the tenant would be paying the monthly payment and we would just have to pay the deposit back (in an ideal world of course, I do know we will probably have some times without tenants/work needing to be done etc.).

I guess I'm looking for a bit better understanding of why I probably shouldn't do this! I probably need to see a mortgage adviser but just wondered if any of my musings were feasible or not. Thank you for any replies :money:

Thrugelmir

moneypenny21 wrote: »

I'm not a big risk taker

Have you fully investigated the ins and outs of such a venture. That it's a business with all the potential rewards and risks.

We would definitely have a tenant straight away.

Family and friends never mix when in business. If that's the source.

moneypenny21

Thanks Thrugelmir. My family have a BTL so I do understand what the risks are and all the pitfalls. The difference there was the house was left to them so no mortgage needed. The risk for us is adding another mortgage.

Tenant straight away - no not friend or family. Family have been there done that and never recommend it!

amnblog

You can arrange things along the lines you suggest subject to you fitting with the Lenders.

It is a lot more complex than making pension contributions so make sure you get advice from an Accountant as well as a Mortgage Broker.