Advice Needed - Buying a second home

rjw18

Hello MSE,

I'm looking for advice to buy a second home and I have no idea how to go about it.

My situation is that I currently have a house which is being let out and I am living in a home that I rent. Instead of renting I would like to purchase a second property to live in.

I have about 22% equity in the home that I let out and I am interested in getting that 22% equity out of the home and using it to put a deposit down on a second home. Is this common?

How would I go about this process and what should I be looking out for? - Ideally, I'd like to keep the one property that I do have, rather than to sell it and then buy the next one. Is this a wise option or would selling it be the best way to go?

Thanks in advanced.

Thrugelmir

rjw18 wrote: »

I have about 22% equity in the home that I let out and I am interested in getting that 22% equity out of the home and using it to put a deposit down on a second home. Is this common?

There's no possibility of a 100% mortgage.

On the face of it you lack sufficient capital to make this idea fly currently.

rjw18

Good point - but it would be possible to use say 10% of the equity instead?

Pixie5740

What kind of mortgage does your rental property have, a BTL mortgage or residential with consent to let?

Have you got other savings to cover the higher rate of SDLT, solicitors, surveys, etc?

Brighty

Did this a few years ago, had a residential mortgage with CTL, new lender disregarded the existing mortgage if they deemed it self financing, i.e rent covered the mortgage by 125% (think most will want 145% nowadays). I scrapped together a 10% deposit for the new place and got a 90% mortgage based on my income. What you won't be able to do is release any equity from the current house as you won't get a 90%BTL mortgage and you won't get a new residential 90% mortgage as the place in let.

paddym27

Can I check what lender you used brighty

enthusiasticsaver

Most buy to let mortgages are maximum 80% LTV so you don't have enough equity in that to raise anything as a deposit for a new property. I think this would be a risky move. If you don't want to rent then sell your rental property. Are you declaring the rent for tax purposes? Buy to let is no where near as attractive now as it used to be five years ago.