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Advice on changing my residential to a BTL


louise_s

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Hello everyone, 

 

I'm currently just starting on my property investment journey and am looking for some advice please. 

 

The story so far . . . 

I currently own my own home (mortgaged) . . . . the LTV is currently 68% with 96k o/s on my existing mortgage. I currently have around 30k equity in my home. Mortgage payments are currently around £450pcm, rental for my area is currently around £650 / £700pcm (there is currently hardly anything to rent in my area, rightmove currently comes up with 1 property) 

 

My partner does not currently live with me but is looking to get onto the property ladder. As he is based in the military its possible for him to apply for a Military Help to Buy loan which is interest free for 10 years. If successful in his application we were considering the option of me moving in with him and turning my current residential home into a BTL, this would become the first property in my portfolio. 

 

My question(s) . . . Could i switch from a residential to a BTL without losing the 30k equity in my home / can i release the equity to use to invest in my 2nd property? or would it be better to leave the equity in my home and treat it more as a long term investment and find a different route to finance my 2nd one. 

 

Sorry for all the questions but Thank you all in advance 

 

Lou

 

 

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Your numbers don't add up. A £96k mortgage + £30k equity = £126k value. This is 76% LTV? Something must be out here.

 

Assuming your mortgage is actually £69k and the value is £100k then yes technically you could release some equity but it's unlikely to be enough to buy another property. You need 25% really, and the house needs to value at £50k minimum, but many lenders need it to be £75k. As a result, you would need between £12k and £18k plus ~£2.5k stamp duty and £2k costs. I don't think you will have this available in the existing property. There are 80% and 85% deals out there, but with you having lived in the property it would be considered consumer BTL and many of these higher LTV lenders don't offer these, and the high LTV products have tough Interest rate Coverage Ratio's that may restrict your options. 

 

Ultimately I think you would be very much reliant on one lender, and any down-valuation or criteria issue will leave you out of contention.

 

 

043_logo_final_03.png.0cdf828351f81e6097208048ac2d018d.pngStuart Phillips

Independent, Whole of Market Mortgage Broker

AALTO Mortgages Ltd

Web  www.aaltomortgages.com

Email  sales@aaltomortgages.com

Call  020 7183 1101

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