Using first home as collateral for a second home?

Viki10

Hello. I've seen this question has been asked before but my circumstances differ and am therefore unsure if the answer will differ also.

I own my own flat purchased nearly 2 years ago for £90k (I put a 10% deposit down) it's now worth around £105k. I wish now to buy a house with my husband so we can start a family and would like to keep the flat as another source of income. Is it possible to use my flat as collateral to get a mortgage on a house and are there any circumstamces that may inhibit this that anyone knows of such as paying more tax on owning a second home? I am admittedly clueless about these sorts of things so any advice/help will be much appreciated. :j

Pixie5740

Viki10 wrote: »

Hello. I've seen this question has been asked before but my circumstances differ and am therefore unsure if the answer will differ also.

I own my own flat purchased nearly 2 years ago for £90k (I put a 10% deposit down) it's now worth around £105k. I wish now to buy a house with my husband so we can start a family and would like to keep the flat as another source of income. Is it possible to use my flat as collateral to get a mortgage on a house and are there any circumstamces that may inhibit this that anyone knows of such as paying more tax on owning a second home? I am admittedly clueless about these sorts of things so any advice/help will be much appreciated. :j

How do your circumstances differ to those who have asked the same thing before?

If you want to use the equity in your current home you would have to release it using a Let to Buy mortgage. The maximum LTV for a LTB Mortgage is 75% and you don't have 25% of equity so there's not enough equity to release anything.

Keeping the current property means you will have to pay the higher rate of SDLT for the purchase of additional residential properties because you will be purchasing an additional residential property.

Crashy_Time

I don`t think using houses as magic money trees works too well nowadays.