Lowering my LTV to upgrade home

mrcawdell

Good afternoon,

I'm hoping someone can help.

I currently have been in my property for circa 3 years. I bought a 1 bed flat which was enough for myself at the time to get on the property ladder. Since buying it i've had a long term girlfriend move in and it's now not big enough.

We had enough money for a larger home, but after 6 months of looking we decided to spend our savings on a once in a lifetime trip across the world.

Unfortunately when we got back there were a number of things wrong which cost us significantly on any savings we expected to come back to.

Long story short, the property is now too small for us to live in together and it's very close quarters.

Would it be possible to remortgage down to 5% (95% LTV) and take the additional money on top of that out to use for fees and/or additional deposit on a new, larger home?

Would be curious to know what you think.

Thrugelmir

Why not sell the property?

mrcawdell

Well you just reminded me of a huge bit of info I missed.

I have 2 and a half years left on my 5 year fixed interest rate

kingstreet

mrcawdell wrote: »

Would it be possible to remortgage down to 5% (95% LTV) and take the additional money on top of that out to use for fees and/or additional deposit on a new, larger home?

Unlikely.

If you plan to "Let To Buy" you'll typically find you can borrow upto perhaps 80% of the value of the property but this may be limited by the rental income potential versus the mortgage interest cost assuming perhaps 5% pa and the rent having to be 140% of the monthly interest.

Speak to an independent mortgage broker.

mrcawdell

Hi King Street

thanks for the response.

I'm not looking to own two homes or a rental property, just merely upgrade from the one I have but using the same mortgage but releasing some capital by putting down 5% not 10%

Thanks

kingstreet

Ok. Your terminology was unclear.

If you can afford a 95% mortgage on your next home and your status enables you to borrow at a high loan to value, you can do with your money what you want.

Yes, the equity in your current home when you sell it and repay the mortgage is your money.

mrcawdell

Great - thank you. I'm currently in a 5 year fixed interest agreement with my mortgage provider but i'm looking to keep the same provider but reduce. Do you think theres any costs I should be aware of or look out for?

kingstreet

When you sell, your current mortgage is repaid.

If you take a new mortgage with that lender for your next purchase, you may be able to port the rate from the old mortgage to the new one and avoid early repayment charges.

If you don't have as large a mortgage for the next property, a proportionate penalty will be charged on the amount you have reduced by.