Remortgaging to purchase a buy-to-let

[JustMe2808]

Me and my partner placed an offer on a house this week which will be our first buy-to-let property and was accepted straight away which we weren't expecting so quickly. On the same day we also had our remortgage agreed which is where our deposit for the house will be coming from. We didn't realise that it could take up to 2 months to release the equity.

So I was wondering if anyone knows whether you can process a buy-to-let mortgage application, if you can prove to the lender that you have a remortgage processing to give you the funds for the deposit (with the paperwork that confirms you will be receiving the money)

Thanks in advance!

[FanDabbyFloozy]

It's a fairly high risk strategy - it sounds like you have no money to even get the deposit together without the remortgage going ahead. I think you are going to have to delay the B2L until you are further down the road - I.E. you have the deposit money. However you need to do full searches and surveys on the B2L so maybe two months isn't really going to delay matters much anyhow, as long as you have the cash to pay for those and an upfront solicitor fee now.

More generally, there isn't as much advantage in B2L after the recent tax changes, I.E. no relief on mortgage interest payments, increased stamp duty. The charges for maintenance and repairs can be significant. I presume you've done your homework but being highly leveraged is not a great idea.

[JustMe2808]

Thanks for the reply. Yes we've done our homework and know exactly what we would be paying for before and afterwards with the new changes. We do have a cash lump set to one side which is part of the deposit, solicitors fees, stamp duty and the early repayment charge on our mortgage so we have the money to continue with the purchase - i just didn't know if they would let us apply for the mortgage with us not having actually received the rest of the money yet?

We would be remortgaging anyway as we were on a very high rate before. we didn't expect them to accept our ridiculously low offer on the house - but now they have, I am worried we could lose it.

[PettsWoodParadise]

Just to clarify, you can get MI relief, but not as a higher rate tax payer. If you don't complete by end of March you will however have extra stamp duty to pay. If you are asking the question as to whether your BTL mortgage will let you continue without you having the deposit it sounds a bit like you may not have revealed all about how you would fund the deposit and whilst the scrutiny of a BTL mortgage is much less than a residential mortgage it will depend on the lender. Also does your residential mortgage lender know your plans? If you haven't revealed all to them and they find you will soon have another mortgage to pay it will affect their affordability model.

[MrsPJones]

Yes, you can apply for the mortgage without the deposit funds in place. They will want to know the source of the deposit, when you tell them it is remortgaging your residential property, the lender may want to see the residential mortgage offer before issuing their own BTL mortgage offer, but you can go ahead and get the application in.

[JustMe2808]

Thank you MrsPJones that is exactly what I was hoping! Do you know this from experience? As it doesn't appear to be the common thing to do when purchasing a buy-to-let.

PettsWoodParadise - I didn't realise you could get mortgage interest relief as a lower tax payer? I thought I'd read the new changes meant nobody would get MI relief soon. Yes mortgage advisor does know plans and is happy that we have the income to take the equity out and shorten our current mortgage term at the same time.

[JustMe2808]

Just wanted to say - thanks for everyone's advice! Had our Buy-to-let mortgage appointment this morning and we have been able to go ahead with the buy-to-let mortgage whilst still waiting for the funds from the equity on our property! Very happy!