Buying a second property

[sasguru]

... you've just turned into SAS without the wit, and that's really not a great thing to be. .

Whereas you are just a less-skilled, poorer version of the predictable, lefty, bien pensant NickFitz.

[Power Mortgages Ltd]

Has anyone got any experience of buying a second property on a residential mortgage in the UK? I'm up to speed with BTL mortgages, but the idea is to buy a second place to do up & rent the first out for a few years(which the bank has already Ok'd).

Already have a mortgage on property 1(which I want to keep as it's so low), but have two BTL owned outright.

I can hit a LTV of 75% on the second property, but how does that work & is borrowing based on your entire income x multiplier minus existing mortgage & unsecured loans.

Until about an hour ago, it didn't occur to me that I could do the second property on a residential as I'm presently perm & the multiplier works out correctly.

Is that how it works? Should I go with the same bank or a different one?

Hi MF, you mention in your first line that the idea is to buy a second place to do up and rent the first out for a few years... I'd assume you would be still living in the first place for a little while when you do the new place up? Any ideas on how long this will take or do you intend to move into the new property and renovate it whilst living there?

If it will affectively become your new main residence and you will be letting out your current property when you move out of it then you don't need to restrict yourself to a second home mortgage.

A second home mortgage is only needed when you 1) have no intention of living in the property yourself (for example renting it to a family member), 2) you only intend to use it as a holiday home or place to stay during the week (for example a place closer to work which you would live in during the week to save on commuting and then return to the family home at the weekend) or 3) you intend to buy the property, remain living in your current property whilst you renovate the new one and then sell the new one once renovation is completed. You would only need/have to get a buy to let mortgage if you were intending to rent the property out to non family members so from what you have said, you don't need a buy to let mortgage.

You are right in what you have said about affordability on second homes, lenders will factor in the repayments* of existing mortgages which will not be repaid and which are not 'self funding' e.g. properties which are rented out where the rental income covers the mortgage payment, normally by 125%.

* some lenders will take the total borrowing on the other property, for example Nationwide. They work on the principle that if they can lend 5 x income and you are on a salary of say £100,000 then maximum borrowing will be £500,000. Therefore if you already have £200,000 on your main residence property you would only be eligible to borrow £300,000 on the new second home property. Other lenders though will go by the monthly repayment for the existing mortgage. Therefore if you are on interest only, you have a particularly favourable rate or the mortgage term is over quite a long period, this can often yield bigger borrowing potential than a lender like Nationwide who will look at the total amount outstanding.

However, if the intention is to move into the new property quite quickly and that will then become your main residence with the current property moving to a buy to let it is very different. You have indicated that your current lender has OK'd you letting your current property out (commonly known as 'consent to let'). Therefore, if you are letting out that property and living in the new one the new lender should ignore the current mortgage payments on the understanding the property will be 'self funding'. This way your full income multiple can be allocated to the new property and using the above figures you could take a mortgage of up to £500,000 (dependant upon other outgoings).

Some lenders will need you to have been letting out the current property for a period of time before they can see if will be self funding which wont be possible if you are living in the property up until the purchase of the new one but other lenders will simply ask for a letter from an A.R.L.A (Association of Residential Letting Agents) registered Letting Agent to confirm the expected rental income of the current property and they will then use this to ascertain the current property will be self funding.

Hopefully that answers your question?

[Old Greg]

Whereas you are just a less-skilled, poorer version of the predictable, lefty, bien pensant NickFitz.

Exactly! If you can't manage at least this, MF, you need to go back to your core product - simple, but delivered reliably and to a high quality.

[Lumiere]

What about a Woolwich Offset mortgage, can it be converted to a BTL / expanded to cover two properties if moving to a new house and keeping the old one to rent out?

[northernladuk]

So actually you're wrong, which is why I didn't post this in Professional as I'm no longer a contractor & knew you'd come steaming in with your big contract johnny big potato clod-hoppers.

It's based on your income, so a mortgage on a secondary property is based on affordability which appears to be around 5.5/6.0 times your salary. You need a LTV of 75% and I found loads of ways to do this evening. This could be considered a second home / holiday home, so along as you can afford the mortgage of both your primary residence and secondary residence coupled with the LTV on the second then it appears this is a goer.

This seems a good link. Have you tried search function?

Ask the mortgage experts - John Charcol

Forgive me for attempting to help.

[Old Greg]

Forgive me for attempting to help.

It's your own fault. WHEN WILL YOU EVER LEARN?

[northernladuk]

It's your own fault. WHEN WILL YOU EVER LEARN?

I know I know

[MarillionFan]

Forgive me for attempting to help.

Excuse me mate, can you tell me where London is?

Errr. Yeah, you go down to Dover, cross the ferry and drive towards Belgium it's somewhere on the left.

Sometimes it's better not to jump in with your clodhoppers with the wrong information it makes you look a bit fick.

Thanks Power Mortgages, glad we have some REAL experts on CUK.

[russell]

So actually you're wrong, which is why I didn't post this in Professional as I'm no longer a contractor & knew you'd come steaming in with your big contract johnny big potato clod-hoppers.

It's based on your income, so a mortgage on a secondary property is based on affordability which appears to be around 5.5/6.0 times your salary. You need a LTV of 75% and I found loads of ways to do this evening.

I don't think they will accept Tesco/Asda loyalty points for the deposit.

[suityou01]

MF lives in a bedsit by himself. I saw it once. Living on the breadline would be an improvement.

He is a deeply disillusioned character, mentally unhinged and in his late 60s.

To be fair to him he has kept his fantasies barely credible, not one hint of pasta in his lap.