Looking for some Mortgage/Remortgage advise

Ian1730

Hi all!

I'm looking for some mortgage/remortgage advice. I've booked in to see a mortgage advisor next week but thought this might be a good place to start! Firstly I'm new to this process and don't know much at all about mortgages, so please excuse any naivety in my post. I will try my best to explain our situation below and what we are 'hoping' to achieve. This might be a non-starter which I fully appreciate...


We currently have 87k left on a house valued at 230k. We are currently looking at a house in the region of 450k.

We are reluctant to sell our house, as we know one day we may like to return to it once the kids are older etc. It is in a great location and a good retirement house, just struggling for space currently hence the desire to buy another home.

We are 'wanting' to move the current property to a buy to let mortgage, whilst also taking out enough equity  for a 10% deposit on the new house and whilst also keeping at least 25% of the value in. We would then hope to move this mortgage to an interest only, but commit to a once a year 10k payment. we would look to switch this to a normal repayment mortgage within approx. 5 years. 

we would then put the equity we have released on the new property and begin to pay this back monthly. 

I know there are many factors to consider in the above, but hypothetically could this be done? We could afford the payments on the house.

Thanks for any advice, support or suggestions that I'm crazy that you might offer  

Ian 

kingstreet

Yes. It's called a let to buy.

Obvious issues are potential rental income estimate which will determine how much you can raise on property one and affordability for a residential mortgage of about £370k assuming you can take the £85k out of property one to take the mortgage to 75%.

There is no point taking only 10% deposit for property two as you will then end up laying a higher rate for a 90% mortgage than you would for the 82% mortgage if you use the £85k mentioned.

Some lenders will do the residential purchase with just a letter from a letting agent confirming the rental income potential of property one to have that mortgage ignored for affordability purposes. Others want two years SA302s, three months bank statements etc to evidence the rent you don't yet receive, so be careful.

Ian1730

Thanks for your response, its much appreciated!

In theory, would it be possible to move this to an interest only as well as taking equity out? This would be short term, and we would look to commit to a one of payment of 10k, however I was unsure on comfortable a lender may be with this. 

dimbo61

Most if not all BTL mortgages are Interest Only.
If you have a high enough income to buy a £450K property with 25% deposit ( £113,000 deposit ) then I guess your also higher rate tax payer/s ?
Is this a good idea might be something you need to consider carefully !
You need a whole of market mortgage brokers and advice from local lettings agents and a good accountant who deals in Rentals and tax implications.
Tenants in common or Joint tenants ?
There is a link at the top of this forum about being a Landlord and some of the hundreds of Laws, Rules and Regulations involved.
GSC, EICR, EPC, How to Rent, Right to Rent, Tenancy Pack, Deposits etc etc etc