Posted on 9 February 2011 by keith
How much can I borrow? I live in a three bedroom flat worth around £80000. I have a £32,000 mortgage @ £200 a month. I want to rent this £450 per month. I want to buy a second home for £55,000 but valued at £85,000.
The first question any Lender is going to ask is how are you able to buy a property worth £85,000 for only £55,000? It is not really possible to answer your question without knowing the answer to this.
If you are buying from a member of your family at a concessional price it may be possible to borrow the whole £55,000, subject to valuation. Whereas if you are buying from a developer you may be restricted to say 85% of the purchase price.
I presume that you are intending to raise any necessary deposit from your existing equity and from the rental figure you have quoted there certainly seems scope to do this. As a rule Lenders will look towards your anticipated rental covering at least 125% of the monthly mortgage payment.
I believe you would benefit from speaking to one of our independent mortgage advisers. Please call on 0344 346 3672 and tell the adviser the date of your question, they will be able to look at your situation and take it from there.
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