Second home + Remortgage

[carlosdici 1]

Hello Guys!

In August 2018 I and my partner bought our first flat (home), We had the help of the Help to Buy Equity scheme. This is a great one bed flat in MCR city centre.
The mortgage is a 5 yrs fixed at 2.34%

We are planning to have a family at some point and for this, we need the biggest house. adn rent our current flat.
We are thinking to buy a second property in 2023 and let this apartment. For doing this, we need to pay the Help to buy first. 

The bank that holds our mortgage is Halifax and they are offering us an "additional borrowing" of £43.000 at 2.84% for 35yrs at fix term of 3 and 5 yrs

Help to buy outstanding amount is £36000

Summary:

• House purchased in £170.000
• An outstanding mortgage with Halifax: £118.662
• Outstanding with Help to buy £36000
• The bank is evaluating the flat in £190.000
• Additional borrowing offered:  £43.000
• The biggest house needed in 3 years (£250-£300k) (I have some savings)

 

Questions:

1. Do you think is possible to pay the HTB with this additional borrowing and after 3 years refinance the house to get part of the principal for a new biggest house and rent the 1 bed flat?
2. Do you think could be a better idea to get this money to get a buy to let apartment in Manchester Leeds Liverpool and them use this to refinance to get the principal for the house? 

Many thanks for your advice

 

[Nathan Cole 20]

Good afternoon @carlosdici

My first thought is that you need have to remember that the minimum equity/deposit for a BTL would be 25%, so by taking the additional borrowing you would be increasing your existing home up to circa 90-95% LTV, which means that you would need to reduce this mortgage down again when converting the property into a BTL in the future. 

If you would like to talk through your options in detail, to determine the best route for yourself, then I would be happy to arrange a conversation with you. 

Please do reach out if you still require some advice.

Best regards 

Nathan Cole