Second residential mortgage question

nickdragolea

I have a current residential mortgage on the house I live in at the moment, but I am planning to move out in a few months due to change of job and renting out this house. Of course, I will get approval from my current mortgage provider for that and make sure they are happy with renting it out.

I do however want to purchase a flat to live in the new place close to my workplace.
How will my mortgage limit be calculated when I come to apply for this new mortgage. Will it take into account the mortgage leftover on my first house, or will that now count as a "buy to let" mortgage would since it's being rented out? My long term plan is actually to either sell the house or switch it to a proper buy to let mortgage but since I am still in my fixed term at the moment, I don't want to be fined for it.

foxy-stoat

Your mortgage limit will be worked out on your affordability and salary - can you afford both mortgages if you don't have a tenant for a few months?

Typhoon2000

In a situation like this you would typically get a but to let mortgage ( possibly interest only and over pay you want to) on the only proprty and new residential mortgage on the new property at the same time.
Typically if the the BTL is self financing, they residential mortgage is not affected and essentially the same process as if you had no BTL property.

Retired_Mortgage_Adviser

Property 1 will be viewed as a mortgaged rental property in the background.

Depending on the outstanding mortgage and the rental income, lender affordability calculators (based on individual lender policies) will deem it as self-financing (ie the rent received covers all expenses associated with the property) or they will calculate a certain sum (monthly running costs) which will be used as a commitment when calculating your affordability for the new residential flat purchase.

With a rental property on a capital repayment mortgage, this will mean that the above commitment could be significant.

Also, it *might* limit your LTV options somewhat but should not stop you from accessing a mainstream rate. For instance, Santander requires that if lending over 90% LTV, no other properties can be owned on completion of the mortgage

nickdragolea wrote: »

I have a current residential mortgage on the house I live in at the moment, but I am planning to move out in a few months due to change of job and renting out this house. Of course, I will get approval from my current mortgage provider for that and make sure they are happy with renting it out.

I do however want to purchase a flat to live in the new place close to my workplace.
How will my mortgage limit be calculated when I come to apply for this new mortgage. Will it take into account the mortgage leftover on my first house, or will that now count as a "buy to let" mortgage would since it's being rented out? My long term plan is actually to either sell the house or switch it to a proper buy to let mortgage but since I am still in my fixed term at the moment, I don't want to be fined for it.

nickdragolea

Thanks guys! So that's reassuring.
Property 1 would be less than 75% LTV at the moment so I could easily get a 'self financing' buy to let mortgage for it, which I will as soon as my current fixed term ends. I suppose I'll have to find lenders that are happy to view it as such for the time being.