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mark anderson

Further Advance for a BTL

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Hi,

Not a property investor as of yet but I have good equity in my own home - LTV over 50%.

I am considering doing a Further Advance where I can borrow up to £75K on my current mortgage to purchase a BTL.

Keen to see if anyone has experience off purchasing through this mechanism? More interested to learn of the associated Risks and downsides.

Thank you very much.

 

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This is certainly one route into BTL.  My only proviso would be only remortgage your home to a level you know you can comfortable manage and remember rates may go up in the future. If you have problems with the BTL you don't want it to cost you your home so don't remortgage for more than you can manage.

On the upside, you will get the best rates on a residential mortgage so the cost will be lower than with a standard BTL mortgage.

Good luck :) 

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It's a regulated activity being raising finance on your home. So you should seek some personalised financial advice from a FCA Authorised Mortgage adviser. They can outline to you the risks and look at the options.

Further Advance is great, typically if you are stuck with the lender on the Initial Rate with some ERC's.

Though not always, especially if you are close to the end of the initial term and especially if you are on SVR. As a full remortgage could be better placed, giving you better rates on your mortgage.

There are other alternatives too such as a 2nd charge loan. Where these come in often best,where the intent is to repay the loan in the short term.

Lenders treat further advances differently - in general, it is less paperwork, but they may require a re-valuation and full application to check against current criteria.

Unfortunately, further advance products may not be as competitive as other lenders, or the lender's remortgage products themselves.

The "biggest risk" is that you are putting your home at risk to purchase a property investment, that may fail. You may loose that money in the Buy-to-Let if your plans do not come to fruition. Leaving you with a large mortgage on your residential property that you have to meet to maintain living in the home. Longer Hours, Working Longer in Life, etc..


:wub: Get Mortgage Advice from my Team at Bespoke Finance on 08009202001 or email hello@bespokefinance.info 
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Please don't take my messages on Property Hub as Personal Financial Advice, just a rambling guy passing time on a Coffee Break.
 

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Hi Adam,

I will be also looking to use the equity on BTL investments. Would you happen to know of anyone who used second charge lender and what rates they achieved? Am I assuming right that they will go up to 75% LTV?

 

Thanks

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I got a further advance on my house to invest in buy-to-lets. My wife and I have owned the property for 8 years and done a lot of work to it (including an extension) so there was a reasonable amount of equity in it. There was just over 2 years left on a 5 year fix for my original mortgage so I went for a 2 year fix on the further advance that way they come up for renewal at the same time.

From what I've heard it varies from bank to bank (or building society) but for mine they were very happy to lend if you were going to buy the BTL outright but if you intend to get a mortgage on it then the underwriters wanted an example of the type of property your are intending to buy, the expected rent on it as well as an example of the type of BTL mortgage you could get for the property from a mortgage broker. They wanted to make sure that the BTL could pay for itself and wouldn't become a liability that I'd need to support financially. There were a few hoops to jump through but it is helping to accelerate our progress towards our goals.

Just be sure you are comfortable with affording the extra mortgage repayments especially if rates go up!

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