We're relocating due to work, but want to keep our current as an investment. Would we qualify for a let to buy mortgage?

Posted on 22 October 2013 by Jo


Our house is valued at 250,000 we still owe 158,000 on our current mortgage. We are having to relocate due to work, but would like to keep our current as an investment and wondered if we would qualify for a let to buy mortgage? Thanks.

Jo,

"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, and the use the funds raised as the deposit for your new main residence, looks feasible for you.  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 £158,000 would give you £29,500 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.

Without knowing more about the area and prices you are moving to along with what your incomes will be, I can't say anything more detailed, however if this sounds of interest to you, then please let me know when you are available, and I'll arrange for you to speak in more detail to one of our consultants.

Regards,

Alistair

contact@johncharcol.co.uk

More than mortgages, talk to me about:
Financial Protection | Investments | Personal and Corporate Pensions | Home Insurance
General Insurance | Valuations | Conveyancing | Wills | Home finders

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.