Getting property finance with security , how`s it best done ?

100rotor

Hi All

I`m fortunate to own two properties outright , round figures for simplicity , property A is worth £100k and is rented out , property B is worth £200k and is my home .

I`d like to sell my home /B and buy a £300k house but keep A and carry on renting it out , as I`m self employed getting a regular mortgage could be a problem so,

Can I use house A as security to raise finance to buy a bigger home ?

How the best way to go about it and who`s best to approach?

Credit rating is squeaky clean.

Thanks

Slithery

Why not just sell A and B and buy a new property outright, then pump all of the savings into your pension?

100rotor

Slithery wrote: »

Why not just sell A and B and buy a new property outright, then pump all of the savings into your pension?

Because A has reliable long term tenants and I`m trying to build up a property portfolio.

agrinnall

100rotor wrote: »

Because A has reliable long term tenants and I`m trying to build up a property portfolio.

1 property isn't a portfolio, and to make a decent amount of money these days you need to have more than a few properties. You might be better to do as Slithery suggests and look at investing any spare cash you have elsewhere.

AnotherJoe

100rotor wrote: »

Hi All

I`m fortunate to own two properties outright , round figures for simplicity , property A is worth £100k and is rented out , property B is worth £200k and is my home .

I`d like to sell my home /B and buy a £300k house but keep A and carry on renting it out , as I`m self employed getting a regular mortgage could be a problem so,

Can I use house A as security to raise finance to buy a bigger home ?


No.


How the best way to go about it and who`s best to approach?

Credit rating is squeaky clean.

Thanks

Perhaps you should compare the profit from the £100k in the BTL, now reduced with the higher rate mortgage on your residential house (because you'll have a worse LTV), and all the interest on the extra £100k at that higher rate. Maybe it wont be such a good investment as you thought?

100rotor

My question was not about whether its a sound investment idea or not but whether banks/ mortgages companies would lend against the rental property or not , if so who offers the best deals?

AnotherJoe

Perhaps I misunderstood your question.
I thought Your question was could you use house A as security against a loan on New House.
If you mean could you just take out a mortgage on House A and then use that money to help buy New House, I don't see why not, you'd just be taking out a BTL mortgage. One of the upsides would be you can then write at least some of the interest on that off against the profits.
Generally 75% is the most you can borrow on a BTL.
See a broker.

Slithery

100rotor wrote: »

Because A has reliable long term tenants and I`m trying to build up a property portfolio.

Sorry, I thought that this site was moneysavingexpert not moneywastingexpert.

100rotor

AnotherJoe wrote: »

Perhaps I misunderstood your question.
I thought Your question was could you use house A as security against a loan on New House.
If you mean could you just take out a mortgage on House A and then use that money to help buy New House, I don't see why not, you'd just be taking out a BTL mortgage. One of the upsides would be you can then write at least some of the interest on that off against the profits.
Generally 75% is the most you can borrow on a BTL.
See a broker.

This is the type of info I need , so it appears getting a BTL mortgage on house A could have tax benefits ? and I`d be free to do as I wanted with the money raised against it?

Thanks

AnotherJoe

100rotor wrote: »

This is the type of info I need , so it appears getting a BTL mortgage on house A could have tax benefits ? and I`d be free to do as I wanted with the money raised against it?

Thanks

You should be, again see a broker. And it sounds as if you need to get some tax advice as well
since writing stuff off against tax is pretty standard, I wonder what else are you missing out on ?

AdrianC

100rotor wrote: »

I`m fortunate to own two properties outright , round figures for simplicity , property A is worth £100k and is rented out , property B is worth £200k and is my home .

I`d like to sell my home /B and buy a £300k house but keep A and carry on renting it out , as I`m self employed getting a regular mortgage could be a problem so,

Can I use house A as security to raise finance to buy a bigger home ?

Why do you need to get a BtL mortgage on A to raise the £100k? You couldn't raise £100k anyway, because that would be 100% LtV, and BtL mortgages are normally 75% max - so you'd still need £25k from somewhere else.

Simply buy C (£300k house for your residence) with the £200k equity from the sale of B, and £100k normal residential mortgage against C. Interest would be cheaper, and the tax regime on BtL mortages is restricted compared to what it was.

Run the numbers to see what's cheaper, by all means, but it seems a daft way to even consider doing it to me.