Second home purchase plans

madhusudhan

Guys, I'm planning to buy a second home and rent out the first home. I have few questions and I'm pretty sure I can take your advise confidently than some of the bank's advisors! So, here is my situation adn my questions:

Situation: I'm currently living in in my own flat. I'm looking to buy a House and rent this flat.

1. Which one of this comes under Buy-To-Let mortgage?
2. The currnet mortgage for my flat is on a fixed rate (18 months to go) and if I change this to diff mortgage (BTL), do I have to pay redemption penalties?
3. Is it hard/easy to take a second mortgage from a different lender (flat is with HSBC)

Any inputs are highly appreciated
Thanks
/M

herbiesjp

In answer to your points:

1) The property that ius let out would come under the BTL scheme - however in your scenario you might not need to that (and keep your current residentail rate)

Call your currnet lender and ask them if they will give a consent to let.

2) If you get consent tolet you do not have to worry about paying any penalties, as you will normally be aloowed to maintian the rate you are on.

3) You will then be in a postion to get a Let -to buy mortgage. This is where the new lender know that you have let out your current property to buy a new one. If the rental income covers the mortgage payments, they will disregard the property in the background, and give your residential rates on your new property

Hope this helps

Griffin78

I'm in the same situation as you madhusudhan.

I have a flat, paying the mortage myself. I would like to keep the flat as it's in a nice area and would provide good rental income (approx 135% of my current repayments). I have 3 years fixed rate (3.95%) left on my mortage.

I'd like to buy a second home to live in whilst letting out the flat but not sure if this is affordable, how do you work it out? I also have a partner now who would contribute to the mortgage on the new residential home.
My understanding is that I could obtain a let to buy mortgage - providing my current mortage provider agree - to buy a new house. I also have some equity in the flat so not sure whether I could use that towards the new purchase?
Would the let to buy mortgage provider simply disregard the flat as it would pay for itself through rental income?........seems risky.
If I wanted to use the equity in the flat would I need to do something completely different like remortage?

herbiesjp

Your current lender only has to agree to you letting out the property

You can go to any lender to get the new property

stefano

Just doing the very thing myself.
First house is going to be let, and second house will be lived in by myself and family.
First house will be self-funding itself (someone else will be paying my mortgage), and any profit will go towards the extra payment on the second property.

thaylock

Why not apply for a 'Rent to Buy' mortgage, which is similar to a 'Buy 2 Let' but you are able to rent your existing property to purchase another one for you to live in.