2nd mortgage advice?

A lot will depend whether you want/have to go the status or non-status route.

For status (employed), most lenders are unlikely to exceed 4x salary, and up to 95% LTV. There may be some who will go to 100% ( and even 125%) LTV, but you may be restricted on interest rates etc., and some will do higher multiples.

No-status lenders are unlikely to exceed 85% LTV (with reasonable interest rates) - income is not requested or not verified - 90% LTV can be done at higher rates and redemption penalties.

A good mortgage broker should be able to assist - check if any fee is payable ( the more difficult the case, the higher the fee is likely to be). Note the maximum fee is limited to 5, if you do not take up the mortgage offer.

Silly questions no doubt, but being a newbie here, say my current mortgage is 150k and the value of the property is 200k. If I move up north my salary would probably not cover 150k, but could I still get a mortgage down south based on the value of the house (or say 85% of the current estimation of 200k)? What I would like to do is rent it out so that it covers the cost, rent up north for a while, and then in future buy up north. So:

a) Could I take out a buy to let mortgage based on the value of 200k (possibly take out some equity to help me up north)?

b) Having rented for a while up north, can I use the fact that I have a house down south to help me get a mortgage up north (or will I just have to get a mortgage based on x times my salary) and ignore the fact that i have another house? In building up a property portfolio I thought you could use collerateral of one property to assist in purchasing another?

c) I would probably prefer to rent the 2 bedroom flat down south to a company rather than by room. Any advice there?

Thanks

What I did was change the mortgage on what was my current house to a buy to let for the remaining mortgage term. Then I got a new mortgage on a 'let to buy' mortgage (letting house already owned to buy second house) for a suitable term for me. If your current provider can't change to buy to let try some others, they're usually willing to talk.

'Legally' you need to hav a buy to let mortgage on your Berkshire property or the tax man's not a happy chappy. When applying for your buy to let mortgage they generally tend to use the rule of 130% of rental value is what you're allowed as a value for the mortgage. When buying property in Scotland (and I'm assuming they're the same rules as England as I'm not sure) you might need to declare your buy to let property, but you should still be able to get the normal multipliers on the mortgage (3 x main, 2.5 x main + 1 x second, etc...).

Re. letting to different people - you're best bet is to talk to local letting agent - they don't have to know if you're not planning to use them, but I'd advise it if you're going to Scotland - do you really want a phone call at 3am saying the central heatings packed in and then have to sort something out for them? Letting agents round where I live tend to charge

Hope this helps.

Laura.

Dont you mean the mortgage co? why would the tax man care what the rate of interest on your mortgage is?

The IR are not concerned with your mortgage lender, only on the deductibility of the interest.

Tax man not happy cos he wants you to declare income on tax return so he can take more money from you - nothing to do with your interest rates, just his way of getting extra tax.

So why should the IR insist you have a BTL mortgage, rather than an "ordinary" mortgage?

"Laura Phillips" wrote

Does that mean that you tell Lender1 "the rent on house1 will cover the BTL mortgage" - and also tell Lender2 "the rent on house1 will cover the LTB mortgage"?? :-)

Is this really true? Which law is broken?

Please excuse my ignorance - what is "rental value"? - does this mean: (1) If the value of house (to an owner who rents it out) is 150,000, then you can get a mortgage for 195,000 (seems generous!) ? (2) If rent is 10,000 per year, can only borrow 13,000 mortgage (I can't see it being this one!) (3) Something else?

It isn't "over so many years". It means that if the mortgage payments (or possibly just the interest) are £500pm then the anticipated likely rent (as confirmed by a local letting agent) should be at least £650pm. It's just to make the lender worry less about the borrower not making enough money to keep up the payments.

You might think 100% would be enough, but they inflate it to allow for gaps in rental income, and for other expenses.

Whether you declare income has got nothing to do with your type of mortgage! Its got to do with whether you declare income.

No, its bollocks.

The bit about the taxman is indeed wrong, but technically you are doing something "illegal" by not converting the ordinary mortgage to BTL (or alternatively obtaining the lender's permission to let). This is not criminally "illegal", but it is something which could result in the lender taking legal action against you for violating the terms of the ordinary mortgage loan agreement, wherein the borrower has agreed to use the property for not other purpose than as a home for himself and his family.

Although possibly technically true, a few lenders have told me "off the record" that would rather *not* know that a tenancy had been created, as that might restrict their repossession options.

"Ronald Raygun" wrote

I understand that one - which could be written as "130% of mortgage interest must be covered by the rent".

"Ronald Raygun" wrote

EXACTLY! (your bit in parentheses) - you should *not* "need to have a buy to let mortgage" - just make sure it's OK with the original lender.

But that's pretty well the same thing. Typically a lender giving permission to let would in return expect to beef up the interest rate to the same as that they would apply to their BTL product if they have one, and make the conditions the same. Even if they don't have one, they'll probably end up bumping the rate up by half a percent or so.

No doubt she will tell us if so, but I suspect she's just jumbled up a few key words and phrases, because they don't really make sense verbatim.

I had the same from an employee of the bank I use. When I remortgaged to get a better rate (No equity withdrawal) I told her that we were going to rent it out and that they would be DSS.

Her only question was would the remortgage be done before we moved out and if so she was happy.

The first house I own was and still is on a normal Halifax mortgage. About

The IR when I was invesitigated 10 years ago were cross with me for not declaring my rental income and fined me for this (foolish youth) but were not even slightly interested as to where or what sort of mortgage I had.

Andy