buying a second house with minimal deposit

[richierex]

I am hoping to buy a second house but am in a rather unique situation so can’t find any information to help me out. I'll just start with a bit of background.

I am 27, and am in the Royal Navy. I also own a small company. My income is circa £44K of which £2000PCM is disposable income.

I currently live with my parents and on base/ship however I have a house that i let out and the 20yr mortgage I have in place on it is covered by the rent, any profit i make is saved in a separate account to allow for repairs on the building that may crop up in the future. The house has a market value of around £125-£130K with a £90k mortgage.

Ok, i think that is the necessary detail you may need to answer my question: I would like to purchase another house to rent out, actually a flat, for around £100K. This would also be to let and I already have a tenant ready to move in, however at the moment i have only around £5K saved as i recently purchased a car (£11K, no finance). What would be the best way about getting a second BTL mortgage. I am pretty sure i could get a 15/20K loan easily or would the bank look at other assets i have and i could balance the deposit against those?

I don’t know how much the bank would see me as a risk. Looking at the worst case scenario (tenants left and i was stuck paying two mortgages) i assume my total repayments would about £950PCM, add standing bills like council tax and i still see myself as easily being able to cover it. As my main job is fairly secure (no redundancies in my branch with my seniority) and the company i own is doing well would i have a chance of getting a mortgage with fairly low cash input, or will i just have to hold out until i have the cash there to offer them as a deposit?

thanks in advance for your help.

[rix]

Choices:
1) Save a bigger deposit.
2) Sell your car and save a bit less for a bigger deposit.

I can't imagine there are many (any) BTL mortgages with a loan to value rate of 95%. If you got a non secured loan to cover the deposit the bank would wipe your repayments off your monthly affordability so no real help!.

[The jiffle king]

an LTV of 70% will give you the better deals and 85% is pushing it. Not sure if there is a 95% out there, but one of the mortgage crew will be along at some point and they give very good advice.
I would sell the car and find a way to make another 10k as you have some fees to pay before actually getting in tenants.

[Sarnie]

Your going to need at least a 20% deposit, may be more because it is a flat.

Is your current mortgage a residential mortgage with consent to lease or is it a BTL?

[BoRED S2upid]

rix said:

Choices:
1) Save a bigger deposit.
2) Sell your car and save a bit less for a bigger deposit.

I can't imagine there are many (any) BTL mortgages with a loan to value rate of 95%. If you got a non secured loan to cover the deposit the bank would wipe your repayments off your monthly affordability so no real help!.

3) buy a cheaper property as the second BTL.

[scotal]

BoRED S2upid said:

3) buy a cheaper property as the second BTL.

He's got £5k, he'd need to trim the house price to £25k for that to fit on current BTL's.

[digger_R]

Hi Scotal,

About to pm you for mortgage advice

[BoRED S2upid]

scotal said:

BoRED S2upid said:

3) buy a cheaper property as the second BTL.

He's got £5k, he'd need to trim the house price to £25k for that to fit on current BTL's.

He will need to be looking up North then.

[richierex]

Sarnie, my current mortgage is a normal one with permission to let. I guess
I am just going to have to save some More for a 20-25k deposit. It's a little frustrating tho as I know I can pay the repayments on a 200k mortgage. I was thinking about using an unsecured Loan as I could have got a 15k loan with £4-500 repayments, and still be able To pay For the mortgage until that one is let too.

[RJD223]

Refinance the car, save for another couple months - then you'd have £20k ish?

[98elise]

BoRED S2upid said:

He will need to be looking up North then.

You can buy in the south. At christmas I bought a 1 bed flat in kent for 28k. The flat above sold for 25 around the same time.

I've also just sold a studio for £30k, but one in the same block went for high teens.

[chris7676]

98elise said:

You can buy in the south. At christmas I bought a 1 bed flat in kent for 28k. The flat above sold for 25 around the same time.

I've also just sold a studio for £30k, but one in the same block went for high teens.

Where is that ? That's even cheap for the north.

[98elise]

chris7676 said:

98elise said:

You can buy in the south. At christmas I bought a 1 bed flat in kent for 28k. The flat above sold for 25 around the same time.

I've also just sold a studio for £30k, but one in the same block went for high teens.

Where is that ? That's even cheap for the north.

Folkestone...there are nice parts, and there are grim parts.....guess where mine is :-). That said its five minutes from:
> The local Uni
> The town centre
> The station (with the HS route into london)
> A sandy beach
> Lower leas park (which is really nice)

The harbour area and pretty much all of the old high street has been bought up buy the ex owner of saga. he's redeveloping the whole area, so it might actually be nice there one day.

Cheap flats appear regularly around the kent coast, but don't expect a decent area or a good state of repair. The upsides are that it will rent for £350-£400 pcm, so well over 10% return.

Watch out for maintenance charges on flats though, they can be high. Mine is fine as the freeholder is absent, thats why it was cheap (it last sold for 60k)