Posted on 6 July 2014 by Nitin
Hi, We own a propert jointly - bought 3 years ago at £250k. Our joint annual income is £120k. At current valuation of our house by out mortgage provider we are 65% LTV presently. Now we are relocating to different city and wish to buy another house which will then become main residence. Can we remortgage our first property, get some equity released and use that as depsoit for new property (about £320k worth). We will plan to put our first property on rent. Is this possible - our current provider HSBC didnt seem positive to this idea. Thanks.
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), which means that we could raise the mortgage to £187,500, which after settling the current loan of £120,000 would give you £67,500 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%).
At the same time we would then arrange 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, as like you have found with HSBC, not all lenders will look at this scenario.
I think it would be worth exploring your options in a bit more detail, and you can do this by contacting one of our consultants on 0344 346 3672 and they'll be able to give you a more detailed idea of how we can help.
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