Ask the experts
About our experts...
At John Charcol, we are constantly asked for advice by borrowers on what they should do when it comes to mortgages. As such, we created this section so that you can submit your questions to our experts. The answers are provided by a number of people who have years of experience in the mortgage market. The team is led by Peter Woodward who spent his formative years as an underwriter with one of the major UK lenders and the last 10 years in our Technical Department along side Ray.
So please do submit your question and we will do all we can to answer it as quickly as possible
Please be aware that these answers can only be generic and no personal recommendations can be made.
Posted on 20/05/2010
I jointly own a flat worth £140,000 with an outstanding mortgage of £112,000.
I also jointly own a freehold UK holiday let property worth £140,000 with an outstanding mortgage of £52,000. This property gives a gross income of £9500.
We have unsecured debts of £33,000 from renovating the holday let property.
My income is £29,000 and the income of my partner is £12,500.
My partner and I would like to permanently move to the holiday let property and rent out our current home on a short assured tenancy.
Is it likely that we would find lender who would remortgage our holiday let to a regular mortgage and include the outstanding unsecured borrowing within the new mortgage and also get a buy-to-let mortgage on our current home? The estimated achievable rent would be £550 monthly.
Categories: Buy-to-let, Holiday homes, Remortgaging, Second properties
Posted on 18/04/2010
I have two property's that I own out right, one is worth about £65000 and the other about £80000. I also have a third with a 5£0000 mortgage on that one is worth about £130000. What is the best way to raise funds to purchase another property?
Categories: Buy-to-let, Raising capital out of property, Second properties
Posted on 16/04/2010
I want to buy a home for my mother to live in, would like her nearer me. Do I need a buy to let even though I would not ask her to pay any rent?
Categories: Second properties
Posted on 21/01/2010
Hi, we have a UK mortgage of £180000 on a house value of £320000, combined income of £65000 and have other outgoings - car loans etc £400 month and credit cards totalling £15000. How much more could we realistically borrow on the equity of our house if we were to remortgage? What interest rates would we be offered? We also have a Spanish house, mortgage free, currently valued at 300,000 Euros. Could we draw down any funds from that?
Your advice is much appreciated.
Kind regards.
Mel
Categories: Holiday homes, Remortgaging, Second properties
Posted on 31/08/2009
Hi we have a house worth £380k and mortgage left to pay of £195k. We would like to buy a holiday cottage to let in Ireland for £130k do you think we will be able to get a mortage based on the equity in our house? And if so what are the best current optins? Our current combined salary is £78k
Claire,
From the figures you have given this should be possible, providing neither of you have significant other financial commitments,. Such as an unsecured loan or credit card debt.
For a couple on your joint income it should be possible to borrow at least 4.5 times your income, which would be more than adequate. However, the cost of a new mortgage increases rapidly if you borrow more than 75% of the property value and it is very expensive to get a remortgage over 85%. I am assuming you have no early repayment charges on your current mortgage but if you do you may be better off asking for a further advance from your current lender rather than remortgaging.
If you would like more detailed advice we will need more information and so please call one of our consultants on 0800 71 81 91.
Categories: Buying abroad, Raising capital out of property, Remortgaging, Second properties
Posted on 08/06/2009
I own outright a house valued at 350,000 and I currently have a 2nd home value at £125,000 with an outstanding mortgage of £50,000. I would like to purchase another home as a 3rd home valued at £175,000. I have a cash deposit of £100,000 - would it make more sense to pay off the £50,000 on the 2nd house and £50,000 off the third or pay it all of the 3rd?
I can afford the repayments no matter the outcome but what would make more sense - pay off 2nd house fully or pay larger amount off 3rd?
Categories: Buy-to-let, Remortgaging, Second properties
Posted on 14/04/2009
You successfully arranged a mortgage for myself (a british national) and my partner (an Australian national) - this was 18 months ago. We are seeking to buy a second property in another area. Are there any providers who will lend? A number of providers have refused on the grounds of them being prepared to lend once to an Australian national but not twice.
Kind regards
Neil
Neil,
Without more information I can’t answer this but it is much tougher now than 18 months ago, especially where your circumstances are non standard.
However, depending on, among other things, the size of your deposit and whether the property will be a second home or a Buy-to-Let, it may be possible. Please call us on 0800 71 81 91 so that we can consider your specific circumstances.
Categories: Second properties, Special circumstances
Posted on 12/02/2009
I am currently living overseas due to work commitments and this is likely to continue for the forseeable future. Currently we own a flat in the UK in my wife's name which we lived in before we left. We are now looking to buy a second, larger property in the UK and I am unsure of whether this falls under a buy-to-let arrangement or, if the mortgage was in my name, first time buyer. Could you let me know and whether living overseas will affect our ability to utilise a UK based lender.
Many thanks
I assume you be letting the property initially, even if it is your intention to reside in it when you eventually return to the UK. Therefore a Buy to Let mortgage would certainly be an option, and although most lenders won’t lend to expats there are some who will.
There are also a few lenders who will offer a mortgage to expats on residential rates on certain conditions, one of which is that it is your only UK property and it is your intention to live in it when you return to the UK, although renting it out until then is perfectly acceptable. To qualify on this basis the property would obviously have to be purchased in your sole name as your wife owns a property. Another requirement to qualify for residential rates is that you are employed by a multi national company, a Government or a public sector body.
I suggest you call us on 020 7611 7000 to discuss your situation and options in more detail.
Categories: Buy-to-let, Ex-pats mortgaging in the UK, Second properties, Special circumstances
Posted on 07/02/2009
Hi,
I live with my mum who is retired and had my name added to her endowment mortgage, because I couldn't afford to buy a house by myself (I earn £20,000).
Over the years I have built savings of £10,000+ and would like to see whether I could purchase a house under a shared ownership scheme.
Would I be eligible as I am already named on a mortgage? Can you have more than one mortgage as long as you tell each lender and can afford to make repayments or would I have to be taken off hers first?
Thanks
There is no legal limit on how many mortgages you can have but you do have to disclose details of any existing mortgages when you apply for a new mortgage and you obviously have to be able to afford all your mortgages, as well as any other financial commitments. There is no requirement to advise a lender you have a mortgage with that you are applying for another mortgage.
You are jointly and severally liable for the existing mortgage, even if your mother pays all the interest. As a result to get another mortgage you will need enough income for the new lender to be satisfied that you can afford both mortgages.
On the figures you have given this looks unrealistic. However, if your mother has sufficient income to cover the current mortgage the lender should be prepared to allow you to come off the mortgage. You would then also have to cease being a part owner of the current property but you might then be able to buy a property on your own.
Categories: Second properties, Special circumstances
Posted on 02/02/2009
A potential route out of negative equity?
My husband and I have a Together mortgage with Northern Rock for £129,000, but since recent price falls believe our house to only be worth c. £110,000. Between us we earn c. £60,000 and can afford to pay our mortgage twice over (which we are currently doing) but are looking to expand our family and therefore need to move quite soon. We are considering buying a second house to use as our main residence, but don't think we'll be able to rent out our current house due to lack of equity.
Therefore, I wondered if it might be an option to buy a repossessed property at below market value, then sometime after completion, remortgaging to release funds that might be used to clear the negative equity on house #1, therefore enabling us to sell it? (e.g. house #2 bought for £130,000 with a 90% mortgage of £117,000; market value of other similar houses on that road ~£160,000, refinance/draw down equity sometime after completion to release the ~£20,000 needed to clear the negative equity in house #1)??? Is this just too complicated, and are there any lenders willing to finance such a move?
Many thanks,
M
Mary,
I am doubtful that your plan will work, firstly because buying as far below market value as you are suggesting is unlikely to be easy. Lenders are required by law to obtain the best possible price on repossessed sales, and to be able to demonstrate they have done so, and I therefore suspect that if you were able to a property at an apparent 20% discount to its perceived value it would probably need money spent on it to bring it up to that value. Secondly, although it should be possible to borrow in total up to about 4 times your combined income, this would only allow you to get another mortgage for about £120,000, and so even though borrowing £117,000 to buy the property should be feasible, it would take your total borrowing very close to the limit, particularly bearing in mind you would presumably be looking to borrow 90% of the enhanced value.
I think a more realistic solution to your problem is to persuade Northern Rock to give you permission to let your existing property. I have spoken to Northern Rock about your situation in general and although, as you are well aware, you are way outside their criteria for a Buy to Let mortgage, in particular the 70% maximum LTV allowed, they may consider giving you permission to let, but naturally will need more information than was in your email. Before they can consider this they will need to know what rent you could expect and at least an indication of how much you intend to borrow to finance your new property.
I therefore suggest you call Northern Rock and explain your situation and ask if they can help by allowing you permission to let, but insist on speaking to one of the underwriters. Don’t go into detail with the call centre staff as they won’t have the authority to take the sort of decisions you need to be made. If Northern Rock agree to do this on acceptable terms please then call us on 0800 71 81 91 so that we can discuss the options with you for a mortgage to finance your purchase.
I presume in your calculations of what is affordable you have allowed for the loss of income while you are on maternity leave and the subsequent increase in costs with a new baby.
Ray Boulger
Categories: Buy-to-let, Raising capital out of property, Second properties, Special circumstances
Posted on 05/03/2008
Dear Katie, I am buying my flat. I owe £29,000 roughly on the mortgage, but I also have debts of about £30,000. The flat will be mine in February 2009 and the endowment is stacking up to meet the commitment and a little more. My question is how can I keep the flat currently worth £300,000 and buy another property of say £160,000. I intend to carry on working. My salary is currently £30,000. Is this feasible? My partner will live in the flat and I want to live in the house. I am looking at a solution to clearing all my debts in earnest. Thank you.
Categories: Second properties
Posted on 19/02/2008
We have a house valued at £350,000 and owe £60,000. We would like to buy a property in Crete for £175,000. We are 61 & 63. What is the best way to do it?
Categories: Second properties
Posted on 04/02/2008
I currently have a joint mortgage with my parents which is £165k. My salary is £25k and my parents salary is £35k. The property is valued at £450k and we have a borrowing agreement with our lender of upto £300k. We have used some of the equity to purchase a 2nd property with the intention to Let it out. The 2nd property is valued at £230k with a rental income of £23k and no mortgage. I would like to take out a mortgage on the 2nd property so that I can then buy a 3rd property.
What kind of mortgage do I need?
How much can I borrow?
Do I use my income to calculate the new mortgage, the rental income or a combination of both?
Which lenders would you recommend that would lend to my type of borrower?
Categories: Buy-to-let, Second properties
Posted on 17/01/2008
Hi Katie, we have a London flat, with only £5,000 mortgage outstanding with a current market value of £450,000. We would like to buy a house property for £700,000. My partner and I have an income of £75,000 pa and no other debts. We would like to keep our current flat and let it and borrow/remortgage for the new house. But nothing comes up from your Charcol tools. Any advice? Many thanks. Tony
Categories: Second properties
Posted on 06/01/2008
Hi Katie, my wife and I own outright a property worth around £250,000. I am 55, my wife is 47 and we are both in work. We would like to buy a flat for our daughter to live in whilst completing her studies. We have never had a mortgage together - can we get a first time buyers mortgage, or is buy to let our only option?
Categories: Second properties
Answers provided in response to Ask the experts are based on the information provided and do not constitute advice under the Financial Services & Markets Act. They reflect the personal views of the authors and do not neccessarily represent the views, positions, strategies or opinions of John Charcol. All comments are made in good faith, and John Charcol will not accept liability for them.
We recommend you seek professional advice with regard to any of these topics where appropriate.