Second mortgage - advice
Discussion
I’m thinking of buying a new flat, but given that the market is pretty slow, I’m wondering what options there might be to temporarily have two flats. I’ve looked briefly in the past at second mortgages and buy-2-let mortgages but neither scenarios seem to offer very competitive rates. Trying to avoid providing un-necessary numbers/detail, so hopefully the above is enough to get some PH guidance!
Current flat: LTV of approx 65%.
Current lender: HSBC. I’m tied in for another 18 months, sole borrower, and I’m at somewhere around 1.6-1.7x salary multiplier.
I’d probably be looking at spending about the same amount on a new flat – perhaps about £250k, looking for a place that needs some work doing…there’s nothing left to do on mine and I’m in need of a project! I have £50k available for a deposit, although could ‘downsize’ on cars if needed and up this to about £80k if I had to (would prefer not to!).
Could anyone suggest whether given the figures above I’m likely to be able to secure a second mortgage at a good rate? If so, who with/where should I look, and what are likely tie-ins etc?
Alternative seems a hassle but would just be to sell my current flat, rent somewhere for 6-12 months and look for a new place. If necessary I could rent out the current flat, which would cover mortgage and more – though strictly speaking I’m not sure I’m meant to rent it out on my current mortgage.
Oh, Option 3: do nothing! Capital (savings) is currently offsetting my mortgage. Nice place/no upheaval!
Current flat: LTV of approx 65%.
Current lender: HSBC. I’m tied in for another 18 months, sole borrower, and I’m at somewhere around 1.6-1.7x salary multiplier.
I’d probably be looking at spending about the same amount on a new flat – perhaps about £250k, looking for a place that needs some work doing…there’s nothing left to do on mine and I’m in need of a project! I have £50k available for a deposit, although could ‘downsize’ on cars if needed and up this to about £80k if I had to (would prefer not to!).
Could anyone suggest whether given the figures above I’m likely to be able to secure a second mortgage at a good rate? If so, who with/where should I look, and what are likely tie-ins etc?
Alternative seems a hassle but would just be to sell my current flat, rent somewhere for 6-12 months and look for a new place. If necessary I could rent out the current flat, which would cover mortgage and more – though strictly speaking I’m not sure I’m meant to rent it out on my current mortgage.
Oh, Option 3: do nothing! Capital (savings) is currently offsetting my mortgage. Nice place/no upheaval!
BlueNGT said:
HSBC wont allow Consent to Let as far as I am aware.
If you have a second Mortgage both Mortgages would be treated commitments and your income would need to be sufficent to cover both Mortgages in full.
A few of us Brokers on here that could look at it in more detail.
Thanks for that BlueNGT – so in theory I could use the 'remaining' borrowing capacity with another lender/another property (i.e. the difference between my current 1.6x and whatever a lender would normally give me...3.5 - 4x?). If so, this would give me sufficient to buy another property needing work.If you have a second Mortgage both Mortgages would be treated commitments and your income would need to be sufficent to cover both Mortgages in full.
A few of us Brokers on here that could look at it in more detail.
I’ve spoken to HSBC and they’ll only cover my primary residence, so I can’t use my latent ‘borrowing power’ with them (I’m sure there’s a technical term!) under the same mortgage. They won’t ‘hold’ a mortgage so I would need a sale and purchase to both be concluded on the same day - this seems unlikely for me as it’ll probably take me a while to find somewhere! Also perhaps complicated by the fact I’d be buying in Scotland.
My early redemption charges would be approx £4k, dropping to £3k in another 6 months time. So, unless I were to find a property and conclude exchanges on the same day I’d be stung by these whatever I do...probably need to ditch this idea?!
Any other suggestions gratefully received!
johnnyBv8 said:
Thanks for that BlueNGT – so in theory I could use the 'remaining' borrowing capacity with another lender/another property (i.e. the difference between my current 1.6x and whatever a lender would normally give me...3.5 - 4x?). If so, this would give me sufficient to buy another property needing work.
That's correct. If you are only at 1.6x income currently there shouldn't be any reason from an affordability point of view that you can't secure another mortgage.Other things will affect the affordability however such as dependents and your current credit committments..................
Sarnie said:
johnnyBv8 said:
Thanks for that BlueNGT – so in theory I could use the 'remaining' borrowing capacity with another lender/another property (i.e. the difference between my current 1.6x and whatever a lender would normally give me...3.5 - 4x?). If so, this would give me sufficient to buy another property needing work.
That's correct. If you are only at 1.6x income currently there shouldn't be any reason from an affordability point of view that you can't secure another mortgage.Other things will affect the affordability however such as dependents and your current credit committments..................
johnnyBv8 said:
Thanks - no dependents and mortgage is my only credit commitment. A couple of other minor regular costs such as gym membership and a lock-up rental, but that's it. I'll have another look into second mortgages...they all seemed to have very high setup costs last time I looked, and/or high interest rates!
The rates and fee's shouldn't be any different to the standard product ranges with most lenders....Non-starter. The T&C's are differnt for a Residential Mortgage and Buy to Let mortgage. You would be in breach of these and if the Lender found out they could, in extreme circumstances, recall the debt.
You would also need a Landlords Insurance policy for the building to ensure the correct liabilities are covered as a let property.
You would also need a Landlords Insurance policy for the building to ensure the correct liabilities are covered as a let property.
johnnyBv8 said:
Great, thanks. Last question: hypothetically-speaking, how feasible would it be not get a new place but not notify current lender that the existing property was being let? Not a preference or a likely course of action….I just like to know my options!
p.s. Nice (orange) car Sarnie!
People do it. No professional will ever advice you to do it though.....p.s. Nice (orange) car Sarnie!
If you want to let it then transfer it over to a BTL product......
Just had another idea - I could buy the new place and port my HSBC mortgage over to the new place, replacing it with another mortgage which would either be BTL (if I wanted to keep it) or without early redemption charges (if I wanted to sell it). Any flaws in this, aside from possibly set up costs on the new mortgage which might only run for a few months?
johnnyBv8 said:
Just had another idea - I could buy the new place and port my HSBC mortgage over to the new place, replacing it with another mortgage which would either be BTL (if I wanted to keep it) or without early redemption charges (if I wanted to sell it). Any flaws in this, aside from possibly set up costs on the new mortgage which might only run for a few months?
You need to consider whether early repayment charges might be applicable on any new Mortgage if you plan to sell within a short period of time!Gassing Station | Finance | Top of Page | What's New | My Stuff