If you are fortunate enough to be in the position where you are looking to let your existing property, or are using it to free up funds for a deposit for a new mortgage, then you have come to the right place.
The hoops that you will have to jump through, in order to secure a buy-to-let mortgage, are the same, regardless of your position.
Remember, if you are planning on letting your initial property, but it still has a mortgage on it, you HAVE to apply to your existing mortgage lender, to obtain their consent, before you let it out.
Here are a few points that you should consider, before using your existing property to secure a new mortgage.
- Establish how much your existing property could rent for because how much you can borrow will be determined by how much income you will be getting from the rent of the old place. Some mortgage lenders will require you to have a minimum of £25k income in order to support a buy-to-let mortgage. Why? Because essentially you are borrowing more money (a buy-to-let mortgage is considerably more expensive than a residential mortgage), and the lender needs to be reassured that you will be able to cover your repayment costs.
- Establish your LTV. LTV is a loan to value ratio. The ideal LTV is 75% or under. I.e. the more deposit you can put down for a property, the more favorable the LTV is for you, as it opens up the market to you, meaning you will have access to cheaper products with better interest rates.
- There are lenders that could go up to 80-85%, but they are few and far between, and you will have to pay for the privilege.
- If you are looking to remortgage you will need a solicitor to oversee the process. They will be involved in ensuring you have paid off your old mortgage and that you have commenced paying the new one.
- Once you have established how much money you can get out of your existing property, a deposit for your new mortgage, the new mortgage for your new property should be treated as if you are applying for a new mortgage from scratch. So do all of your preparation in advance, as if this was your only mortgage.
- It is worth remembering that even if you take out two new mortgages, one being buy-to-let and the other a brand new one on your new property, the buy-to-let lenders usually like to see evidence that you are going to be moving into your new property and that the two mortgages are starting simultaneously.
- Don’t forget to take into account all legal fees and stamp duty that you will have to pay (stamp duty is on the new property that you are buying, not the old one that you are changing the mortgage on).
Finally, if you have any questions about letting your current property so you may buy a new one please do not hesitate to get in contact.
If you have any questions about any of the above or want to know more then please get in touch which can be done through //activebrokers.co.uk/ Or through social media on Facebook, Instagram, Twitter or Youtube.
- This does not constitute advice, it is for information purposes only.
- You should contact a mortgage broker for personalized advice for your specific circumstances. Please ask us for a personalized illustration.
- A fee of up to 2% of the mortgage amount is payable. The precise amount will depend on your circumstances. A typical example is £995.00 payable on application and the remainder payable on mortgage offer.
- Active Brokers Limited is authorized and regulated by the Financial Conduct Authority and is entered on the Financial Services Register (//www.fca.org.uk/register) under reference 488342.
- Your home may be repossessed if you do not keep up repayments on your mortgage.
- The Financial Conduct Authority does not regulate Business Buy to Let Mortgages.