Are you remortgaging the current house to fund another? Or buying the other with some cash and a BTL mortgage?

Hi thekingisdead.

We may do has the property is larger and in a better area so will probably be a yes
to put a bigger deposit down.

Errrr, so which is it? You know you can't answer 'yes' to a two tailed question!? 😀

Buy to let mortgages should be based on rental income not your salary. You will probably need 25% - 30% deposit if you are going for a buy to let mortgage on another property.

tkid asks a pertinent question...

LOL OK lets say yes to get the conversation moving 😉

Thanks for that info JulianA Very interesting

Thanks Julian. There are quite a few permeatations that need to be known before deciding which route to go down, you seem to be reluctant to provide detail however!

Rent will have to cover 125% of a BTL monthly payment.
traditionally, one would load the BTL mortgage (I.e. as large as possible), and keep your personal mortgage small (or non existent) as the BTL mortgage will garner tax relief on rental income. There are scenarios where you may choose not to do this however.

OK whats BTL ?
Yep Mortgage ends next year but may do this before Mortgage ends.

Are you staying in your current place, acquiring another and renting that out?

Assuming yes to that one, you can remortgage your current place, using the cash generated to buy the rental place. I've done this, it works out way cheaper than BTL specific loans, on fees charged, interest rate offered and Loan to Value requirements.

It also means more security for your potential tenants since there is no loan secured on the house, though if you were bankrupted somehow it would eventually get sticky for them.

midlifecrashes Nope will move out of existing house and move into new one.

OK sounds like the way I am thinking of doing this.

What type of Mortgage did you go for and what type of cash you borrow off of
your exciting property

Youll need to put a BTL (buy to let) on your current house (which you'll rent) and put the money into the next one.
A 40% deposit (or keeping 40% equity, as you already own it) will get you the cheapest BTL mortgage.

With the upmost respect, please do lots of research (stw is a starting place, not definitive) you are not giving the impression you know much about this (again, with the upmost respect)

Nope thats why i am getting an idea from here
who is the best to go to for such a mortgage
I was thinking of going to Virgin One account

Thank you for the advice

Disagreeing with thekingisdead here.

Easiest is to raise a deposit by saving, start a fresh residential mortgage on the new place. This will be cheaper on most counts than any BTL product. Your current house will be fully paid off, you can do what you like with it, i.e. rent it out.

If you want to get started before your existing mortgage is paid, ask your lender if they are willing to allow lettings, they might say no, might say fine, go ahead. They might say fine, but add a percent to your rate.

Go to one of the comparison sites that do BTL mortgages.
The competitive of mortgage products varies month to month so unless someone has mortgaged recently, it's always worth checking the entire market, or use a broker.

My BTL was with Godiva (part of cov building society) but that was year ago so no idea how competeive they are now.

When it gets to the actual application stage, as it's not currently rented they will prob want written evidence what level of rent is achievable. You'll need 3 letting agents to provide a valuation for this (tell them you're looking for an agent, even if you aren't)

Disagreeing with thekingisdead here.

Easiest is to raise a deposit by saving, start a fresh residential mortgage on the new place. This will be cheaper on most counts than any BTL product. Your current house will be fully paid off, you can do what you like with it, i.e. rent it out.

If you want to get started before your existing mortgage is paid, ask your lender if they are willing to allow lettings, they might say no, might say fine, go ahead. They might say fine, but add a percent to your rate.

Maybe correct if he can raise sufficient deposit without remortgaging the current house. , I was basing my advice on the (cryptic) information given.
However, I still wouldn't have a rental house with no mortgage, and a residential house mortgaged upto the hilt, for the tax reasons already stated, especially if you're a 40% tax payer. Without detailed knowledge of someone's financial situation, it's pretty academic 😀

Thanks Julian. There are quite a few permeatations that need to be known before deciding which route to go down, you seem to be reluctant to provide detail however!

@tkid - I'm not reluctant to provide detail - there just wasn't enough information in the OP to say any more!

See a Financial Advisor would be the best advice I could give...

Edit - or you could go to a company who will do the whole thing for you, including initial advice. I'm pretty sure that Romans Estate Agents (for whom I worked for a few months but am not otherwise associated with) will do this - ergo there will be others offering similar services.

Okay, back to basics. Why do you want another house to let out? Monthly income for paying the bills today, capital gain over a few years, pension for soon or for 15+ years down the line. Bolt hole for planned future divorce, place for child to live when grown up?

All valid reasons, but might affect how to finance, as would the rest of the household finances.

Well eventually give the first house to our only Daughter
and rent out the larger house and then move over to
our place we bought last year in Spain

this won't be next week but thats what we are planning for the future

But wanting good sound advice before we approach the banks.

Just how do others do this buy to let.

how can you make money on BTL when its got a mortgage? I have a few & have looked at loads of places, best yield I could get was 5% in SW London.

If its financed at say 5%, then you are working for nothing. All that hassle & risk.

Future capital growth doesn't look brilliant, I reckon 2% pa over the long term.

@tkid - I'm not reluctant to provide detail - there just wasn't enough information in the OP to say any more!

Whoops, meant to write OP doesn't want to provide detail! Sorry!

Okay, back to basics. Why do you want another house to let out? Monthly income for paying the bills today, capital gain over a few years, pension for soon or for 15+ years down the line. Bolt hole for planned future divorce, place for child to live when grown up?

All valid reasons, but might affect how to finance, as would the rest of the household finances.

What he said.

Well Basically 20+ years down the line and why sell when I don't need to
and why not make some rental income out of it. And basically pensions
not looking good to really on. And no Divorce and yep give the smaller house
at a much later date

Hope the above info helps

No worries tkid - I thought that's probably what you meant.

how can you make money on BTL when its got a mortgage?

Easy: interest only mortgage. Properly done you should make more money on a £30k investment than sticking it in a building society.

I am not a financial or mortgage advisor - see one!

SPEAK TO FINANCIAL ADVISOR

JulianA
Easy: interest only mortgage. Properly done you should make more money on a £30k investment than sticking it in a building society.

Interesting just been chatting to a friend of mine he was advised by Barclays to do this.

So how would you plan to repay the capital at the end of the term?

midlifecrashes - simple houses always go up, there is no end to this housing boom (sent from 2005)

Seriously, without knowing all of your financial commitments and what is currently on offer it's hard to tell. Some products/deals that look suicidal to some may be perfect and vice versa.

We are in the process of swapping one mortgage to BTL and it's not coming in cheap.

Find a good IFA and go see them. Most now charge for the service but consider it an investment. You can probably take it off your Self Assessment for the BTL anyway. Also have a quick look at HMRC for the details on BTL investments and Tax Liability ([url= http://singletrackworld.com/forum/topic/self-assessment-by-to-let-receiptsproof-ect ]Some Info Here[/url])