Posted on 14 December 2015 by Ms Philipsen
My husband and myself purchased a two-bed apartment for £300,000 with a 15% deposit of £45.000. Three years later our outstanding mortgage is £235,000. The apartment is based in London. Now three years later the apartment is approximately worth £450,000.My husband and I are considering renting out our place and moving outside of the city. We will need a new deposit though for approx £50,000. Would it be possible to release this amount on our current apartment?
What you are looking to do is called a 'Let to Buy', whereby you capital raise on your existing property (typically 75% LTV), which would release equity to be used towards the purchase of your new home, subject to valuation.
Plenty of lenders will look at this type of scenario, with the actual amount of the Let to Buy mortgage based mainly on the rental income your current home is likely to generate. The amount you can borrow is usually determined by the monthly rent , as a guide lenders normally expect this to cover your monthly mortgage payments by at least 125%. The new main residence is then based on your affordability. Please be mindful that lenders have a slightly different way of assessing the impact of a Let to Buy mortgage in the background when determining how much you can borrow.
Although not knowing your full financial position , it would appear , based on the information you have supplied that this something we can help you explore in detail.
One of the real plus points of 'Let To Buy' is that you don’t have to take both mortgages from the same lender, meaning that we can obtain the most suitably competitive product for each transaction I'd recommend having an initial discussion with one of our consultants to get a better idea of exactly what we can do to get you moving into your new home. If you'd like to do so, then please let me know and I'll arrange a convenient time to speak to one.
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 necessarily 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.