Posted on 28 August 2013 by Jeffrey
I own a London flat outright, worth £550k. I want to let it out and buy a new flat for £625k. Have a household income of £100k. Would this be possible with a let-to-buy mortgage? Also would it be possible to raise more capital to refurbish the new flat (eg get a total mortgage of £675k, using equity on the old flat and bank's claim on the new?
On the face of I can't see why we shouldn't be able to do a "Let To Buy", to enable you to move to your new main residence.
Typically most lenders will cap the borrowing on your current property at 75% of the value (though there are a few who do go higher), which means that we could raise a mortgage of £412,500 which would then be put towards the deposit on the new property. The loan size can sometimes be restricted by the level of rental income received, with lenders typically looking for the rent to be a minimum of 125% of the monthly payment at either the pay rate or a notional rate (say 5%), and we would need to know the likely rent the property would generate and take this into consideration.
At the same time we'd arrange a main residence mortgage of £212,500 for you for your new home. However because of your strong income position, there's no reason why you couldn't take a slightly higher mortgage of £262,500 to cover the costs of the refubishment.
One of the real plus points of 'Let To Buy' is that we can choose from the whole of the mortgage for both mortgages, rather than one lender to do both.
If this sounds of interest to you, then please let me know when would be a good time for you, and I'll arrange for you to speak in more detail to one of our consultants.
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