Buying a 2nd property with a mortgage?

NewDecade

Happy New Year All!

I wanted to get some further info on whether or not based on my current circumstances, I would be able to buy a second property. Thank you in advance for any help!

Background
So back in 2017 I managed to make it on the property ladder and take out my first mortgage on a property costing £357k where I started on a balance of £190k owed. My salary at the time was £41k.

Fast forward, with a lot of overpayments and more frugal spending, I now have just under £140k owed on the mortgage. My salary has also increased to £53k now.

I've also scored lucky and managed to sell a large majority of bitcoins this tax year gaining £145k and I do also have savings totalling £30k too. I believe come April 2020, I will need to report these capital gains and pay 20% on anything over the tax free allowance by the end of the calendar year (so by 31/12/2020) so that's 20% on roughly £145k (minus CGT tax free allowance) = £26k tax owed (ouch!) meaning realistically I have just under £150k including my savings.

The way my mortgage arrangement works is that I can't just pay it all off without incurring a massive fee otherwise that's probably what I'd do.

So as stated, my main request is that I would like to buy a second property - it may not be the best move investment wise but basically I love the house that I've bought and I'm living with my family (parents and younger siblings) there so I definitely don't want to sell it but on the flip side, it's far from work so I'm thinking of buying a smaller place, closer to work to live in during the week.

My pre-analysis
Assuming the house value has remained roughly the same, am I for example allowed to remortgage the remainder of the house that I "own" (in this case £357k - £140k = £217k) and use that value in addition to my £150k savings to buy another property? Am I correct in saying that I therefore have ~£367k to play with? I assume I can't use the whole house's value for this so the value will most likely be lower than that - probably a minimum of 5% LTV so perhaps more like £350k? I recognise I need to pay higher stamp duty (3% up to £125k, 5% for the next £125k up to £250k and then 8% for anything over £250k up to £925k) so on a place costing £350k, that's a meaty £18k!

Would I also be able to borrow more now that my salary has gone up (I believe it's a 4.5x multiplier so as my salary has gone up by £12k and I previously borrowed the max, does that mean right now I can borrow another 4.5x £12k = £54k?).

Another point I need to bear in mind is that I do have decreasing life insurance so I would probably need to increase the cover on that too I assume.

Would this be accurate, and if so, is this the best/only option based on my current situation?

Thank you again for reading!

Caz3121

salary £53k
if 4.5 multiplier then mortgage amount £238.5k
current mortgage £140k meaning you may be able to release an additional £98.5k to add to your £150k savings

asm89

Some lenders allow a second residential mortgage, play with some online calculators to check how much you could borrow this way, as an alternative.

What area will you be buying in?

NewDecade

Caz3121 wrote: »

salary £53k
if 4.5 multiplier then mortgage amount £238.5k
current mortgage £140k meaning you may be able to release an additional £98.5k to add to your £150k savings

Thanks, can't I "remortgage" my current place and use the equity as part of funds to buy my 2nd home?

asm89 wrote: »

Some lenders allow a second residential mortgage, play with some online calculators to check how much you could borrow this way, as an alternative.

What area will you be buying in?

Problem is if what Caz3121 says is the only option (simply maxing out my borrowing based on my salary) then that would only give me around £250k at most which is not enough to get anything decent anywhere near London of where I am working.

How much I can get will ultimately drive which area I end up buying in.