Property Portfolio

Posted on 21 July 2011 by Lisa

My husband and I currently own a one bedroom flat outright which we rent out. We are now looking to build a small portfolio and are currently purchasing our second buy to let. We would like a 3rd and possibly a 4th fairly quickly. The advice I'm after is : Can we borrow £50000 from our flat that we own outright worth £88000 in order to put a deposit down on two more properties, or less than £50000 for just one more. OR are we best not re-mortgaging the property we own and wait till we have built up enough savings for a deposit (about 7 years).


Using your existing investment property as security to raise the deposit to buy another is fairly common.  You will find that the two main constraints on how much you can raise are the property's value and how much rental you receive each month.

The amount you want to raise represents only 62.5% of the property value and this will give you access to some of the cheaper rates on the market, if you can restrict the amount you borrow to 60% you will have an even better choice.  You need to compare different products very carefully as there is a balance to be struck between the size of the fee, which can be anything between £995 - £2,000 and the interest rate payable. As a rough guide you will need your monthly rental to cover 125% of the monthly mortgage interest payments.

I believe we can help you work out what is best for you and that you would benefit from speaking to one of our independent mortgage advisers.  Please call 0344 346 3672 and tell the consultant the date and title of your question, they will then be able to offer further advice on your situation.


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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