# Mortgage advice



## raitkens83 (Jun 7, 2009)

Looking for a bit of advice please, We live in a small flat and in the next year or 2 we will be looking at buying a bigger place. We are thinking of renting the flat out instead of selling. Does this mean we will still need a minimum 15% deposit or what ever it is for the next place or could we put 8%-10% (whatever we manage to save) down and use what we currently own on our flat? Roughly 15%-20%? Is this the best way to do it? If this makes any sense.

TIA


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## Bero (Mar 9, 2008)

No short answer really. It depends on: -

Your flat value
The outstanding mortgage on the flat
The current Buy to Let (BtL) mortgage Loan to Value (LtV) requirments
House minimum depost %.

*Maximum out of pocket costs* using e.g. values
Flat value - £100k
Flat mortgage outstanding - £80k
If you tell your flat mortgage company you will be renting it out they will put you onto a BtL mortgage, this could require a maximum LtV of 60% (e.g. maximum mortgage on £100k flat would be £60k)
Minimum house deposit 15% of a £200k house.

In this case you would have to pay £20k into your flat mortgage (to bring you from 80% LtV to 60%) and an additional £30k deposit on the new house.

*Minimum out of pocket costs* using e.g. values
Flat value - £150k
Flat mortgage outstanding - £60k
Minimum BtL LtV 60%
Minimum house deposit 15% of a £200k house.

In this case you would 'only' need to find the £30k house deposit.....or if you dont have the £30k you could remortgauge the flat to £90k (maximum possible with 60% LtV) and use the £30k released to put a deposit on the new house.

In any case you can't 'put down' what you own on your flat - to release money you would have to remortgage your flat at a higher value and use the money released to put down on your new house.

Hopefully this makes sence!? If you decide not to tell your flat mortgage company you are renting it out YOU MUST tell your buildings (and contents if furnished) insurer and get a proper landlords policy - it's not really any more cost than a personal one.


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## raitkens83 (Jun 7, 2009)

Bero said:


> No short answer really. It depends on: -
> 
> Your flat value
> The outstanding mortgage on the flat
> ...


:doublesho :doublesho This is gonna be alot more difficult than i imagined. Will look into this more but after reading that i doubt it would be possible to afford buying 2 places. We own about £13k of our flat (15%). We could possibly save another £15k in a year or 2 but thats maximum. I thought it would be fairly simple to have 2 places.:lol:


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## Bero (Mar 9, 2008)

£13k with respect to current valuation or the price you paid for it?

What you paid does not come into it, LtV will be calculated on *Outstanding mortgage/current valuation*, if the flat has increased in value the numbers will look better....if it's gone down they'll be worse.

Find a mortgage broker who does not charge any fees (ever!) and work the numbers with him, I'm only using 60% LtV on a BtL as thats what i was looking at 18months ago - things change quickly.

Edit - Money supermarket shows one leader offering BtL at 70%, one at 65% and lots at 60%...none of them at very attractive rates until 50-60%.


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## raitkens83 (Jun 7, 2009)

Bero said:


> £13k with respect to current valuation or the price you paid for it?
> 
> What you paid does not come into it, LtV will be calculated on *Outstanding mortgage/current valuation*, if the flat has increased in value the numbers will look better....if it's gone down they'll be worse.
> 
> ...


13k on what we paid for it, We bought when prices were nearest the highest point. We have also added gsh and double glazed windows in every room plus a few other extra's so im hoping it may be valued a bit more than we paid. I very much doubt it would be up to 40%. I didnt think how much i owned on my flat had anything to do with getting another mortgage really, Apart from what i was asking. Im going to find a broker and see what he/she thinks but its looking like its very much not going to be possible then.

Thanks for your advice :thumb:


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## Bero (Mar 9, 2008)

What you owe on your flat will not have a big (maybe no) direct bearing on getting another mortgage....BUT if you are changing your flat mortgae to a Buy to Let mortgage you will have to own 40% of the current value, or you will not be able to convert it to a buy to let mortgage.......if you have to put money into your flat to convert it to BtL this would reduce the money available to put as a deposit on your new house.

Yep a good broker will be more knowledgable and explain better than me!


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