Residential Mortgage to a Buy to Let Mortgage

Posted on 20 May 2018 by Gussy Alamein

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.

Hi Gussy,

As you already have a mortgage on the Holiday Home, I do not think they would be much difficulty in arranging a standard residential mortgage on this and consolidating your unsecured borrowing to give you a mortgage of around £85,000. There are a few Lenders who restrict the amount of capital raising allowed on a remortgage, but subject to your personal circumstances and the property being adequate security the are plenty of others to choose from.

Your existing property has quite a high mortgage on it in relation to it's value and this severely restricts the number of Lenders who will consider a Buy to Let mortgage on it. The nearest I could find would allow a mortgage of around £105,000, £7,000 short of what you need. However, it is probably possible to cover this by increasing the mortgage on the Holiday Home without having a detrimental effect on the interest rates you would pay.

I recommend that you speak to an independent mortgage broker about your plans and they will be able to juggle the total debt between the two properties to make sure you get the best solution for you.

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.


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