Is it easy to re-mortgage for an extra £70k?

[Frankstar123]

Ok so bear with me. I've never re-mortgaged for more money before so I thought i'd ask on here first, i'm a plain old borrower and saver.

So current status:

Married: both 36 with 3 kids
I have a house worth £250K, (realistic value, i put it on the market 4 months ago and had 6 offers at £255K within 2 days but our target house got taken off the market 2 days after we put ours up for sale...anyhooo)

Current Outstanding mortgage £130k - 10 Years left.

Savings £120,000

We want to buy a second property for our family enjoyment. Not fussed about rental (but would be nice to get some to reduce risk).

I know that 2nd mortgages rates are more than normal house mortgages so here's my thinking:

Remortgage current home to £200K (80% LTV) (Thus £70K more in savings) (Our 2 year deal is up in September)

Buy holiday home (bricks and mortar, not a caravan / lodge) for £250K using £150K of savings for deposit, £10K for stamp 5K for fees.

So my question is would a bank just lend me an extra £70K on my mortgage, i know its down to personal circumstance but is "yeah i might buy a second home" a suitable reason for the bank lending me more money? As mentioned i've not done this type of thing before; I've only borrowed more when i've moved into a bigger house. I'd prefer to get the extra £70k ready to buy a second home rather than remortgage to new rate and then re-borrow after 1-2 months. Its just a bit unfortunate that my current deal is ending in 3 weeks.

Any thoughts would be appreciated.

Thanks.

Frankstar

[XJ75]

I can't answer the question about whether or not the lender will see the purchase of the second home as a valid reason for releasing equity via a re-mortgage, but what I can say is have you considered the affordability criteria?

Obviously a bigger mortgage = bigger repayments, coupled with a second (albeit smaller) mortgage, does your income cover the payments enough for a lender to consider it affordable?

[Sarnie]

Frankstar123 said:

Ok so bear with me. I've never re-mortgaged for more money before so I thought i'd ask on here first, i'm a plain old borrower and saver.

So current status:

Married: both 36 with 3 kids
I have a house worth £250K, (realistic value, i put it on the market 4 months ago and had 6 offers at £255K within 2 days but our target house got taken off the market 2 days after we put ours up for sale...anyhooo)

Current Outstanding mortgage £130k - 10 Years left.

Savings £120,000

We want to buy a second property for our family enjoyment. Not fussed about rental (but would be nice to get some to reduce risk).

I know that 2nd mortgages rates are more than normal house mortgages so here's my thinking:

Remortgage current home to £200K (80% LTV) (Thus £70K more in savings) (Our 2 year deal is up in September)

Buy holiday home (bricks and mortar, not a caravan / lodge) for £250K using £150K of savings for deposit, £10K for stamp 5K for fees.

So my question is would a bank just lend me an extra £70K on my mortgage, i know its down to personal circumstance but is "yeah i might buy a second home" a suitable reason for the bank lending me more money? As mentioned i've not done this type of thing before; I've only borrowed more when i've moved into a bigger house. I'd prefer to get the extra £70k ready to buy a second home rather than remortgage to new rate and then re-borrow after 1-2 months. Its just a bit unfortunate that my current deal is ending in 3 weeks.

Any thoughts would be appreciated.

Thanks.

Frankstar

Franstar,

Most lenders will lend for the reason you are requesting, thats not really a problem.

Affordability will be the key and they will want to assess your ability to maintain the new £200k mortgage along with any additional mortgage on the new property, potentially also in addition to the running costs of maintaining both properties.

It's all feasible, it's just dependent on your income and circumstances and choosing the right lender is key, as some lenders, Coventry BS for example, will decline it if there are going to be two residential properties in play.

[Yipper]

Looks very risky with Brexit chaos, falling real wages, soaring inflation, rising taxes, countrywide debt problems, peaking / declining house prices, and economic recession on the horizon for the next 1 to 10 years.

You're better off renting somewhere for the odd weekend or week and swapping between locations for variety.

Or buy in Bulgaria. You can get a big 3-bed home for ~£20k. No need for a second mortgage.

[Frankstar123]

Thanks for all your replies. Interesting about Coventry BS. Thanks.

In terms of affordability our current mortgage monthly commitment is < 10% of our take home pay. My only debt is Audi Lease at £400 p/month. We both work in IT in different sectors.

Its interesting the views on Brexit; our 2nd home will be in a popular tourist area. When the financial crash happened in 2007-2008
UK tourism, static caravans and motorhome sales when through the roof because people opted to stay in UK. So in my opinion if this happens then the option of renting out 2nd house would cover mortgage. Re Bulgaria and foreign countries, i want somewhere where I can there in a 90 min or so drive.

Still food for thought though. Thanks!

[Sarnie]

Frankstar123 said:

In terms of affordability our current mortgage monthly commitment is < 10% of our take home pay.

^^That will change with the increased lending, new mortgage on the second property and cost of maintaining an additional property....

[Frankstar123]

Sarnie said:

^^That will change with the increased lending, new mortgage on the second property and cost of maintaining an additional property....

Yeah obviously thanks
I'll probably increase the term on my house back to 25 years thus monthly payments will actually go down on current mortgage, so my joint mortgages will be ~16% of net take home pay. Obviously gas electric water TV, council tax will come to roughly £300-£400 extra per month.

Thanks

Edited by Frankstar123 on Wednesday 2nd August 11:38

[anonymous-user]

Consider also,

• Invest in pension with max' tax relief, and
• Rent a holiday home wherever you want, whenever you want.

Avoids a lot of hassle and avoids the hefty taxes on second homes.