A few years ago we moved out of our home (Property 1), released some equity, did a self build (Property 2) from the funds released, and let P1.
Upon remortgaging P1 we did a tracker at 0.5% above base rate, which is interest only, the repayments are very very low. P1 was let for a few years while we lived in P2 overseas. We then moved back into P1, and let P2 (still tenanted, and mortgage free) We did nothing to the mortgage of P1, it is still an interest only BTL mortgage.
The house has almost doubled in value since the last time we remortgaged, and I now want to release equity again to purchase P3 in Spain - a 2 bed holiday home, which we will let when we are not there, and holiday in when not let. My budget for P3 is no more than £160k.
How will the lender look upon us currently living in the home (P1)? My thought is that we will move out of P1 again, and move into P3 for some time. This should mean we can keep the mortgage as a BTL and interest free, but will our mortgage terms change? Will I risk a much less favorable mortgage with much higher repayments?
Will the equity release be dependent on rent yield as opposed to value of the house? In the current market similar properties rent at £2500-£3000 pcm, which is much much more than current monthly mortgage repayment.