Re-mortgage to buy another house. The ins and outs of how it all works??

Dillon141

Hi everyone
I really need some clarity from a mortgage adviser regarding this…..

I have a house I’m finishing renovating and planning on holiday letting it.  After the kitchen is completed in a few weeks it will be worth £300,000. There is no mortgage on it now.

Another house has come up for sale for £500,000. I believe I can re-mortgage the first house to get a deposit to put down to buy the second house?  How does this work though exactly?

if I remortgage 75% of the first house, that would give me £225,000. If I put this down as a deposit to buy the second house I would need a mortgage of £275,000 to get to the £500,000. 

So basically, I would have two mortgages? One of £225,000 on the first house and £275,000 on the second house? Is that how it basically works? The lender may give me a portfolio mortgage and it would be just one mortgage of £500,000, but in essence that’s how it would work? 

Thanks
Dill

kingstreet

Subject to affordability, yes.

Dillon141

kingstreet said:

Subject to affordability, yes.

Thanks for replying. Seems a hefty mortgage overall to pay off doesn’t it. When you hear “re-mortgage to raise equity to put down to purchase another property” it isn’t immediately clear you will have effectively two mortgages. 

This was in order to expand a holiday let portfolio. I better make sure I will get the required income from them then before proceeding. Lol.

Flugelhorn

I did it but bought the second one outright - wouldn't feel that keen on having 2 mortgages 

housebuyer143

Yes, one will be on a holiday let mortgage and the other residential. The holiday let one might have to be self supporting and if it is it may not affect the affordability for your residential.
Best to speak to a good broker about it, but what you want to do it doable.

Dillon141

housebuyer143 said:

Yes, one will be on a holiday let mortgage and the other residential. The holiday let one might have to be self supporting and if it is it may not affect the affordability for your residential.
Best to speak to a good broker about it, but what you want to do it doable.

Both properties would be let out as holiday lets. 

housebuyer143

Dillon141 said:

housebuyer143 said:

Yes, one will be on a holiday let mortgage and the other residential. The holiday let one might have to be self supporting and if it is it may not affect the affordability for your residential.
Best to speak to a good broker about it, but what you want to do it doable.

Both properties would be let out as holiday lets. 

Oh ok, fair enough. That's fine too ,👍