Remortgage existing home to buy a flat?

michael1234

Hello All

My house is now mortgage free. However, I'm thinking of buying a flat in a block nearby. They go for around 250k but I would only have around 190k in cash. Therefore, I was thinking of paying for the difference using a mortgage.

Originally I was thinking of getting a mortgage directly on the flat itself but given how quick they tend to get snapped up, I was thinking of raising 70k ish on my existing house instead. The home is worth just into 7 figures so a lot more than the 70k needed. That way I'd be ready to buy the flat as soon as the next one from the block I'm interested in goes on the market.

Problem is it seems it is difficult  to "equity release" when you're under 55.

Can I get a normal mortgage with normal/competitive interest rates on my existing home in order to have some extra cash? I should I add I think I meet all the normal income criteria and don't have any credit issues. So I believe I could buy the flat using the flat itself as equity but would rather do it on my existing house.

I apologise to anyone desperate to own a single home and sickened by the idea someone might want another one (!)

DullGreyGuy

How many years would you need the mortgage over?

What is your plan for the flat? A buy to let?

kingstreet

You're not looking for 'equity release'. That's a product in the lifetime mortgage sector. You're looking for a remortgage of an unencumbered property for second property purchase. It sounds straightforward from what you say. As it's going to earn a  broker about £250 you'll probably have to pay a fee or use one of the factory outfits.

michael1234

Thanks both.

Yes it would be to let it out to my mother-in-law who would need to be close by to help look after our disabled child. If its a mortgage on my existing home, presumably it doesn't need to be a buy to let mortgage? Not sure what the "purpose of loan" would be though.

Length would be 20 to 25 years. I was hoping we'd be seen as being in a reasonably strong position and so they might agree to interest-only? That would be attractive due to being able to repay small amounts to start with followed by making flexible overpayments as soon as rent from the flat was sorted etc. On the other hand they might want to see an accountant grade plan as to how the capitol would be repaid which would be more expense...

MWT

michael1234 said:

Yes it would be to let it out to my mother-in-law who would need to be close by to help look after our disabled child. If its a mortgage on my existing home, presumably it doesn't need to be a buy to let mortgage? Not sure what the "purpose of loan" would be though.

Shouldn't be a problem just borrowing for the purpose of buying a flat, as long as you are not planning to let it out.

Similarly, if you were planning to let it to a close relative then you couldn't use a normal 'buy to let' mortgage, it would have to be a regulated product.

kingstreet

michael1234 said:

Thanks both.

Yes it would be to let it out to my mother-in-law who would need to be close by to help look after our disabled child. If its a mortgage on my existing home, presumably it doesn't need to be a buy to let mortgage? Not sure what the "purpose of loan" would be though.

Length would be 20 to 25 years. I was hoping we'd be seen as being in a reasonably strong position and so they might agree to interest-only? That would be attractive due to being able to repay small amounts to start with followed by making flexible overpayments as soon as rent from the flat was sorted etc. On the other hand they might want to see an accountant grade plan as to how the capitol would be repaid which would be more expense...

Purchase of second property/purchase of property for dependent relative.

IO - depends on income and loan to value. EG Halifax is £75k pa plus sole income and £300k equity minimum for sale of property as repayment method.

michael1234

MWT said:

michael1234 said:

Yes it would be to let it out to my mother-in-law who would need to be close by to help look after our disabled child. If its a mortgage on my existing home, presumably it doesn't need to be a buy to let mortgage? Not sure what the "purpose of loan" would be though.

Shouldn't be a problem just borrowing for the purpose of buying a flat, as long as you are not planning to let it out.

Similarly, if you were planning to let it to a close relative then you couldn't use a normal 'buy to let' mortgage, it would have to be a regulated product.

So to keep plans flexible, if I did let it out either to extended family or someone else on a commercial basis I'd need to apply for a buy2let mortgage even though the mortgage wouldn't be mortgaged against a buy2let property? i.e. the mortgage charge would be against my main home which is not a buy2let property.

kingstreet

michael1234 said:

MWT said:

michael1234 said:

Yes it would be to let it out to my mother-in-law who would need to be close by to help look after our disabled child. If its a mortgage on my existing home, presumably it doesn't need to be a buy to let mortgage? Not sure what the "purpose of loan" would be though.

Shouldn't be a problem just borrowing for the purpose of buying a flat, as long as you are not planning to let it out.

Similarly, if you were planning to let it to a close relative then you couldn't use a normal 'buy to let' mortgage, it would have to be a regulated product.

So to keep plans flexible, if I did let it out either to extended family or someone else on a commercial basis I'd need to apply for a buy2let mortgage even though the mortgage wouldn't be mortgaged against a buy2let property? i.e. the mortgage charge would be against my main home which is not a buy2let property.

Nope. What I said above. You only need a BTL mortgage on the property you plan to let