Buying a second house advice

restless6

Hi

I have a few questions regarding buying a second home ...

The house I own on  a mortgage is rented out.
i am living in a rented house .
i would like to buy a second house to live in instead of renting ...
so will I have to change my current mortgage to a buy to let mortgage before applying for a new one for the second house or do you apply after or can I leave it as it is on consent to let ?
also - will I be required to have a higher deposit as it’s a second home so instead of five per cent would I need more ? 

Thanks 

KAP0365

I thought If you’re renting out the house you’re paying a mortgage on it had to be a buy to let mortgage anyway? 

restless6

KAP0365 said:

I thought If you’re renting out the house you’re paying a mortgage on it had to be a buy to let mortgage anyway? 

I’m not sure . I rent mine at the moment with consent to let . But I’m guessing this will have to change if I buy a second house . Just not sure on the timings of applying to change it etc 

MovingForwards

Consent to let is a temporary agreement.

To try and get a mortgage for a home to live in you would need a buy to let mortgage on the current property provided it is a viable rental.

Then a normal mortgage for the home you want to buy. 5% deposit mortgages are not a thing at the moment, more like 10-20% but you will definitely need a broker to walk you through this.

restless6

MovingForwards said:

Consent to let is a temporary agreement.

To try and get a mortgage for a home to live in you would need a buy to let mortgage on the current property provided it is a viable rental.

Then a normal mortgage for the home you want to buy. 5% deposit mortgages are not a thing at the moment, more like 10-20% but you will definitely need a broker to walk you through this.

Thanks for the info - would I have to apply for my mortgage to be converted to a buy to let mortgage prior to applying for a mortgage to buy a second house - and if so does there have to be a gap of a certain time between the two ? 

The mortgage is currently £300 pcm and I receive £700 pcm rent so I would think even with a higher rate on a BTL (not sure how much it would go up by ) that it would be classed as viable ?

MovingForwards

https://www.landlordvision.co.uk/rental-yield-calculator.html

I honestly couldn't say because you haven't said what the property is worth and how much mortgage is outstanding.

You need 25% equity in the property for a buy to let mortgage. 

Then as it's a dedicated B2L mortgage you need to make 125-145% of the annual mortgage payments, depending on lender.

There are loads of threads about B2L mortgages, the requirements and also whether they are viable due to the yield, unfortunately there are not the tax deductables there used to be.

Hopefully some of the other members will be along later to talk through different things as I'm going off what I've picked up reading MSE. I can't think which members to tag who can assist!

dimbo61

You need to look at the big picture !
You will pay higher rate Stamp duty if you buy another property so 3% extra on top of the normal stamp duty.
You now need at least 15% deposit for the new home as well as other costs legals, mortgage fee, higher rate Stamp duty.
Meanwhile your making little profit from renting out your current property and may have alot of equity tied up in it.
The tax changes mean you earn less in your BTL business more so if your a higher rate taxpayer.
Sit down with your accountant and mortgage broker to see if it's even possible.
Some lenders might ignore the BTL mortgage and income ! When applying for a new residential mortgage.

restless6

My house is worth about £160-£170k 
I owe about £65k on the mortgage .
The houses I am looking at buying To live in are under the stamp duty threshold so I think I will only have to pay 3 per cent - but please happy to be corrected if I am wrong? 

I am not going to sell my previous house so only have the options of continuing to rent or buying a second property to live in - which is what I would rather do. I have been living in A rented house for the last two years and am really wanting my own home again. 

I understand current mortgages are looking for 15 per cent deposit but this may change ?
i did consult a broker juts prior to lockdown who said some mortgage providers may disregard the house as it ‘looks after itself ‘ but then lockdown happened and I’ve heard nothing since - hence searching for some answers on here .

Thrugelmir

Make contact with the broker again to determine your options. 

heston2014

Definitely speak to a broker, are you looking to release funds from equity to put down as a deposit for second home?

As Consent to Let is only temporary, if you’re looking to release funds for a deposit, you could remortgage to a Let to Buy, where you could borrow up to 75% LTV. Part of this would pay off your existing mortgage and leave some for a deposit, additional stamp duty and other related fees. The amount you could borrow will be based on rental income. Then you take out a new residential mortgage for the second property which will be based on your salary.
Let to Buy is “letting a property” to buy, as I understand it’s almost same as Buy to Let, rates are higher too I believe.