Raising funds to buy share of inherited home

waveneygnome

Posting for friend:

She has inherited 25% of a house, along with siblings (still with solicitors/in the Estate/not transferred yet)
Inherited house value £300k, her share 75k........needs to raise 225k.
She would like to buy-out the other siblings (all in agreement), and live in the house.
Her current has a house nr London is valued circa £625, with a £190k IO mortgage.
Could she remortgage the London property on a BTL mortgage (rent income likely £2100pcm in this area) 
She is self employed/has accountant/tax returns etc up to date, income vairable, but averages 25k pa

Besides the issues of getting into the B2L business......is this doable?

dimbo61

One for a broker

Thrugelmir

On £25k pa is extremely unlikely to be able to obtain a mortgage of £225k. Having a BTL merely adds another layer of complexity as well. Sell the other property would seem to be the best suggestion. 

getmore4less

£2,100pm on £620k 4% gross yield may just be viable,

£225k+£190k   £415k on £620 LTV 67% LTV   BTL around 2.25% £800pm   at 75%LTV an £465k £900pm

go up o 75% to have cashflow funds between £0-£50k to cover any costs or voids and pay the mortgage if no income

Could structure some of the debt on the residential to get the rate down,  the income may limit that option.

One for a good broker to balance the options  once the idea of becoming a landlord is thought through and sunk in.

waveneygnome

Thanks All.

Broker has come back and thinks is doable:

Mortgage of £448k on BTL, fixed 5yrs 2.34%

No mortgage on inherited/residential house

Is this rate OK?

dimbo61

On a BTL mortgage  fixed for 5 years that is a good rate at 70% LTV.
Check if she can overpay the  BTL mortgage by 10% each year !
That way she can pay down some of the debt each month IF she wants too.

dimbo61

Your friend may even benefit from the cut in stamp duty as she will now own 2 properties.