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Buy To Let Advice- HTB

Jabba198
Posts: 11 Forumite
Hi Guys,
I currently have a flat of which we bought using the Gov's 20% Help to Buy scheme. Its coming up to 5 years no so we will start paying interest on the £50k we borrowed from them. Our fixed rate mortgage is due to end at the same time.
(House cost £250k, our deposit £12.5k, HTB Loan £50k)
We are looking to re locate to the other end of the country this year so we are debating on wether to just sell up and buy or to rent out this place and buy/rent.
Obviously to be able to do either we need to clear the HTB. So either by selling the place or re-mortgaging.
So my questions regarding renting are:-
Could I re mortgage to a buy to let mortgage and clear the HTB payment?
If the flat is worth £270k now (was £250k 5 years a go) we put in an initial £12.5k and have paid off £20k of mortgage and we would have 80% (£16k) off the "profit" so hopefully have £49k in "Equity" which if I am right in thinking is not enough for a buy to let mortgage anyway. We could probably get to £64k but again, that is not quite enough. Is that correct? If that is the case I can get rid of the idea of renting it out and just look into selling and moving!
Annoyingly we could rent our place for £1200 a month unfurnished which would easily pay off a "normal" mortgage but with the Buy-To-Let requiring a 25% I guess its not possible.
Thinking about it, that would leave us with no deposit to buy another place and would mean that we would have to rent. The £1200 would hopefully cover the BTL mortgage and leave some for us to use towards rent/saving but not enough (after fee's etc) to pay for both the mortgage on Property 1 AND rent on Property 2.
I think I am talking myself out of it as I type
If anyone could clarify that I am thinking on the right lines and not overlooking something It would be appreciated!
I currently have a flat of which we bought using the Gov's 20% Help to Buy scheme. Its coming up to 5 years no so we will start paying interest on the £50k we borrowed from them. Our fixed rate mortgage is due to end at the same time.
(House cost £250k, our deposit £12.5k, HTB Loan £50k)
We are looking to re locate to the other end of the country this year so we are debating on wether to just sell up and buy or to rent out this place and buy/rent.
Obviously to be able to do either we need to clear the HTB. So either by selling the place or re-mortgaging.
So my questions regarding renting are:-
Could I re mortgage to a buy to let mortgage and clear the HTB payment?
If the flat is worth £270k now (was £250k 5 years a go) we put in an initial £12.5k and have paid off £20k of mortgage and we would have 80% (£16k) off the "profit" so hopefully have £49k in "Equity" which if I am right in thinking is not enough for a buy to let mortgage anyway. We could probably get to £64k but again, that is not quite enough. Is that correct? If that is the case I can get rid of the idea of renting it out and just look into selling and moving!
Annoyingly we could rent our place for £1200 a month unfurnished which would easily pay off a "normal" mortgage but with the Buy-To-Let requiring a 25% I guess its not possible.
Thinking about it, that would leave us with no deposit to buy another place and would mean that we would have to rent. The £1200 would hopefully cover the BTL mortgage and leave some for us to use towards rent/saving but not enough (after fee's etc) to pay for both the mortgage on Property 1 AND rent on Property 2.
I think I am talking myself out of it as I type

If anyone could clarify that I am thinking on the right lines and not overlooking something It would be appreciated!
0
Comments
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- in principle, one can remortgage to a BTL and pay-off the equity loan.- you will likely need a minimum 25% equity in the property to remo to a BTL so about 67.5k on a 270k flat
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