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Remortgage - Additional borrowing & Buy To Let conversion

Wondering if someone could basically give a blunt yes/no answer on if this is possible , and a good idea or if there is another way to go about it .

So i currently live in a house I have a mortgage on , I initially took out a 20 year mortgage about 4 and a half years ago . Inittially I took a 3 year fix , and am currently about 6/ months away from the end of a 2 year fix .

Since buying this house on my own I  have got into a relationship , and we want to buy somewhere a bit bigger together to start a family . So we have been saving up for a deposit . Currently on track to have about half the savings we need for a 10% deposit by the end of the year , and probably have saved enough for the full 10% by late 2025 or  early 2026 .

My current plan was to convert to a buy to let mortgage on the current place , I was going to take out additional borrowing because really before renting it out it would ideally need a new bathroom , this is the only thing I never got round to doing after moving in .

Would it be possible / sensible to take out more additional borrowing and also put some of this towards my share of the deposit on a new place ?

Im thinking it would allow us to do that mid next year when my fix on this place is due to end and I was going to be looking at remortgaging anyway . Rather than waiting until 2026 .

Comments

  • Hoenir
    Hoenir Posts: 4,482 Forumite
    1,000 Posts Name Dropper
    Financially you need to cost the numbers fully. As to whether a BTL is worthwhile. 

    By selling the property and releasing the equity. You'd have a much larger deposit to put down on the new property. This may well result in a lower interest rate as the result of a lower LTV. Your money can be protected through the drafting of a Declaration of Trust.  

    If you plan to start a family. Then at some point. Your household income will be diminished. Do you want the worry of a BTL and all the potential pitfalls that come with it. 
  • Jay19903562
    Jay19903562 Posts: 16 Forumite
    Sixth Anniversary 10 Posts Name Dropper Combo Breaker
    edited 3 October at 11:38AM
    Hoenir said:
    Financially you need to cost the numbers fully. As to whether a BTL is worthwhile. 

    By selling the property and releasing the equity. You'd have a much larger deposit to put down on the new property. This may well result in a lower interest rate as the result of a lower LTV. Your money can be protected through the drafting of a Declaration of Trust.  

    If you plan to start a family. Then at some point. Your household income will be diminished. Do you want the worry of a BTL and all the potential pitfalls that come with it.
    If the BTL was a problem in the future I could always sell it and release the equity at that point , that was always my thought process on the matter .

    Of course there is always the risk of pitfalls with anything including the BTL option , but in the long run if I did keep the BTL for a number of years until the mortgage was finished on it , then it would be a substantial asset for my retirement pot

    If I were to sell the current property , release the equity to use as a deposit ,and do that in a chain would I be able to take some of the equity out of the proceeds of the sale of the current property as cash ?


  • Typhoon2000
    Typhoon2000 Posts: 1,130 Forumite
    Part of the Furniture 1,000 Posts Combo Breaker
    Do calculate what mortgage you could get on your existing property as a BTL bases on expected rental. Obviously you don’t want your existing residential mortgage to go over this when you switch it to residential. Cant see any issue applying for additional borrowing for renovation. These things always cost more than you initially expect. If you have any left over I guess it entirely upto you if you put into savings, spend it or pay down your mortgage. Careful with the fix you go for with the additional borrowing to minimise early repayment charges.
    Yes any excess equity on sale above the  deposit required on the new property is returned to you.
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