Posted on 24 April 2014 by Taz
My partner and I have 2 properties, one we live in and another as an investment. However, we want to move out from where we live, rent it out and purchase a bigger property. We have a combined salary for £55k, and savings of £20k. Is there anyway we could purchase a bigger property by using the 2 current properties we have as a guarantee?
What you are looking to do is known as a "Let To Buy", whereby you capital raise on your existing property at the same time as moving it onto to a Buy To Let basis. You then use the funds raised as the deposit for your new main residence.
Typically most lenders cap the borrowing on your current property at 75% of the value (though there are a few who do go higher), also the loan 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%). We would also look at raising a Buy To Let mortgage for your investnment property, again typically to 75% of the value, subject to the rent achievable.
At the same time we will be arranging a main residence mortgage for you & your partner for your new home. 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 you'd like to discuss your options in more detail, then please contact one of our consultants on 0344 346 3672 and they'll be able to give you a better idea of the figures involved.
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