Second mortgage help

ele_91

I currently own a property with approx 25% equity. I’ve been trying to sell it but two sales have fallen through due to FTB not being able to get a mortgage and the seller of the onward purchase is getting fed up.

I am trying to sell to jointly buy a house with my partner. He has 100k deposit and I planned to top this up. We don’t need my contribution for the deposit as the value is £300k but we do need my income to afford the property.

The house is on a very popular street with lots of rental properties so I would have no problems letting it. It was let before I purchased it so has all safety certs. 

My question is, is there a way I can be on both mortgages? I’m not sure I would have enough equity in my house to convert to BTL as the 25% is based on value increase which the lender might not support, although I’ve had no issues selling at this price. Can I get consent to let and get the second mortgage this way?

I have around £10k in savings which would cover any rental voids. 

K_S

@ele_91 If your onward purchase is around 70% LTV, and your income is large enough to support it (as per lender calcs) along with the existing house, a second mortgage is unlikely to be an intractable issue.

ACG

This is probably a lot easier to fix than you think.
Tell the new lender you plan on letting the property out. You will need a letter from an ARLA registered letting agent to confirm what the expected rental income will be. Assuming the rent is more than the mortgage repayments it should be fine with most lenders. 

If you have not applied for the new mortgage yet, best to check before you apply. Failing that, speak to a broker, this is something any experienced broker will breeze through. 

Sorry, just to add you would also need to speak to your current lender and request consent to let. If they agree to you letting it out, that should be fine. If not, that could throw a bit of a spanner in the works. 

CSL0183

Suspect you will be liable for the 3% additional rate tax too so factor the £9k penalty (£300k x 3%) for having more than one residential property. 

ele_91

Hi everyone thanks for the replies. So even if I decide not to let it and carry on selling, I could tell the lender that I am letting it and present the letter of expected income? The monthly mortgage payment is £340 and expected rental income is £650. But I’m now wondering wether to continue selling instead. Therefore buying the new house and selling the other shortly after?

[Deleted User]

No, then you would just apply to the new lender as a second property mortgage.   Your affordability would need to support both mortgages but they are quite simple transactions 

ele_91

Ok thank you. One last question - we asked our broker about this today and the mortgage offer we have is with Barclays; they won’t lend us a second mortgage but he said plenty of others would based on affordability. Therefore, if we make a new application, can we keep the Barclays mortgage offer on the table whilst we apply?

[Deleted User]

Yes but have to make reply longer so yes again