Posted on 20 April 2014 by Christina
My partner and I are both 42 yrs old. I own a house valued at around £250000 with an outstanding loan amount of £80000 and about half that amount in savings. I have a workplace pension (with lump sum) but he does not so we would like to secure our financial future with a second property. Our combined income is around £72,000. The next house we buy will be where we want to live long term and the current prices range from £275-£350000 but I am not sure this is achievable and I was wondering about our options including using existing equity.
It sounds like what you are looking to do is 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), which means that we could raise the mortgage to £187,500, which after settling the current loan of £80,000 would give you £107,500 to put towards the deposit on the new property. The loan can also 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%), so we'd need to know how much rent your current property is likely to generate too.
At the same time we would then arrange a main residence mortgage for you & your partner for your new home. With the new affordability rules being introduced at the the end of the week, I can't say exactly how much we could get you on your new mortgage, but with your joint income of £72,000 I would be hopeful it should allow you to make the move you are looking to make.
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 more detailed dea of how we can help.
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