Discussion
Afternoon all
I've currently got a mortgage on a property which unfortunately is in negative equity, but creeping out of it ever so slowly.
We want to gather up a deposit and buy a house but don't want to sell our flat. The current mortgage is interest only. I had a plan to put the current mortgage onto a repayment one and put tenants in it, and get the money together for a deposit on a house.
Do I have to get a buy to let mortgage on this current property? What sort of criteria do I have to meet to get a second mortgage?
I thought I'd ask the brains on here before I make a fool of myself somewhere else
Cheers in advance
I've currently got a mortgage on a property which unfortunately is in negative equity, but creeping out of it ever so slowly.
We want to gather up a deposit and buy a house but don't want to sell our flat. The current mortgage is interest only. I had a plan to put the current mortgage onto a repayment one and put tenants in it, and get the money together for a deposit on a house.
Do I have to get a buy to let mortgage on this current property? What sort of criteria do I have to meet to get a second mortgage?
I thought I'd ask the brains on here before I make a fool of myself somewhere else
Cheers in advance
DeanR32 said:
Afternoon all
I've currently got a mortgage on a property which unfortunately is in negative equity, but creeping out of it ever so slowly.
We want to gather up a deposit and buy a house but don't want to sell our flat. The current mortgage is interest only. I had a plan to put the current mortgage onto a repayment one and put tenants in it, and get the money together for a deposit on a house.
Do I have to get a buy to let mortgage on this current property? What sort of criteria do I have to meet to get a second mortgage?
I thought I'd ask the brains on here before I make a fool of myself somewhere else
Cheers in advance
You could ask your current lender for "permission to let" which they might (probably will) decline given the negative equity. What is the rental cover (the percentage by which the rental income exceeds the interest cost every month)? I've currently got a mortgage on a property which unfortunately is in negative equity, but creeping out of it ever so slowly.
We want to gather up a deposit and buy a house but don't want to sell our flat. The current mortgage is interest only. I had a plan to put the current mortgage onto a repayment one and put tenants in it, and get the money together for a deposit on a house.
Do I have to get a buy to let mortgage on this current property? What sort of criteria do I have to meet to get a second mortgage?
I thought I'd ask the brains on here before I make a fool of myself somewhere else
Cheers in advance
You would not be able to get BTL mortgage without substantial equity, 25% for eg.
You need to accumulate equity and also save for a deposit, it will be an expensive time.
You don't have to get a BTL but you do have to gain the permission of your current lender to rent the property out.
You can get another mortgage no problem but it will depend on the figures involved as to how feasible it will be to achieve what you are looking to do. If you can evidence that the rent you are or will be receiving is more than 125% of the monthly payment, most lenders will ignore it. If the rent isn't more than 125% then your income may still be enough to cover the shortfall.
It just depends on all of the figures involved as a whole.
You can get another mortgage no problem but it will depend on the figures involved as to how feasible it will be to achieve what you are looking to do. If you can evidence that the rent you are or will be receiving is more than 125% of the monthly payment, most lenders will ignore it. If the rent isn't more than 125% then your income may still be enough to cover the shortfall.
It just depends on all of the figures involved as a whole.
Thanks for the replies guys
The only way I could cover the 125% would be to leave it as interest only. I didn't really want to do that. Would that even be possible?
I'm sorting out the deposit for the second property as we speak. It's just what to do with this flat.
I'll calculate (if I know what I'm doing!!) what a repayment mortgage on my current property would be and see what rent I'd get for it too. Am I doing it right??? Haha
The only way I could cover the 125% would be to leave it as interest only. I didn't really want to do that. Would that even be possible?
I'm sorting out the deposit for the second property as we speak. It's just what to do with this flat.
I'll calculate (if I know what I'm doing!!) what a repayment mortgage on my current property would be and see what rent I'd get for it too. Am I doing it right??? Haha
DeanR32 said:
Thanks for the replies guys
The only way I could cover the 125% would be to leave it as interest only. I didn't really want to do that. Would that even be possible?
I'm sorting out the deposit for the second property as we speak. It's just what to do with this flat.
I'll calculate (if I know what I'm doing!!) what a repayment mortgage on my current property would be and see what rent I'd get for it too. Am I doing it right??? Haha
You are doing it right but how relevant it actually is is dependent on the figures involved. Eg your income maybe sufficient to secure the new property without the rent covering the mortgage by 125%....The only way I could cover the 125% would be to leave it as interest only. I didn't really want to do that. Would that even be possible?
I'm sorting out the deposit for the second property as we speak. It's just what to do with this flat.
I'll calculate (if I know what I'm doing!!) what a repayment mortgage on my current property would be and see what rent I'd get for it too. Am I doing it right??? Haha
Feel free to drop me a line if you don't want to post specifics?
DeanR32 said:
Thanks for the replies guys
The only way I could cover the 125% would be to leave it as interest only. I didn't really want to do that. Would that even be possible?
I'm sorting out the deposit for the second property as we speak. It's just what to do with this flat.
I'll calculate (if I know what I'm doing!!) what a repayment mortgage on my current property would be and see what rent I'd get for it too. Am I doing it right??? Haha
The lender's calc would based on 125% of the interest so why commit extra income on a repayment basis? Not usually tax efficient - you'd generally be better off accumulating a bigger deposit for your residential purchase. If the rental income does begin accumulating you can make ad-hoc payments to reduce the balance rather than be committed to it.The only way I could cover the 125% would be to leave it as interest only. I didn't really want to do that. Would that even be possible?
I'm sorting out the deposit for the second property as we speak. It's just what to do with this flat.
I'll calculate (if I know what I'm doing!!) what a repayment mortgage on my current property would be and see what rent I'd get for it too. Am I doing it right??? Haha
As Sarnie says it all depends on your specific situation, you might have enough affordability on paper to support the aggregate borrowing of both loans and not worry about a BTL. Take the man's advice and let him tell you what's possible, the online calculators etc will be a waste of time.
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