Second Property queries

[NotAMamaYet]

I'll try to be brief!!

Myself and my boyfriend have separate finances. He owns a house worth approx £300k in Cambridgeshire.

We're eager to move to London however my boyfriend likes the idea of renting out his house and buying a second property together.

His house potentially has good rental market (3 bed semi, lots of parking, close to Business Park) so changing the mortgage to buy to let shouldn't - in theory - be too difficult?!

We're thinking of taking the equity out of this house + his £20k savings to buy another property in London.

Our only qualm is whether this is just too much of an ask in the current climate?? We'd be looking at a place for about £400k-£450k ...

Obviously we really just need to speak to a mortgage advisor but thought to scope out the situation from you guys first in case we are way off the mark...

Lenders will expect about 20 to 25% of equity left in BTL. They'll also need to see the mortgage is covered by the rent and then an additional % on top.
So have a look at some BTL mortgages and then do your sums based on that. See how that leaves you in terms of deposit for the second purchase and how much mortgage you can get from your incomes.

Ah great!! That's really interesting to know about the amount of equity they'd require to be left in the house - he only bought the house a year or so ago which may put our plans out of action straight away!!

Thanks for the pointers!

My understanding is that the better rates are limited to those with 40% equity and that there are increasingly stringent rules on how much rental income is needed.

Quite a large proportion of BTL mortgages are broker only, and there are quite a lot of variables involved. (Several lenders don't like lending to new landlords.) It is really worth talking to someone like London and Country (fee free) who will take you through options and repayment costs.

Thanks for the info! If 40% equity is needed I think we're definitely getting ahead of ourselves ....

I'll have a look into London and Country!

Thanks again x

One thing you will need to factor in is the second home stamp duty. If you buy in joint names with your boyfriend then you will be liable to pay an extra 3% on top of the usual rate. A wah to avoid it is if you were able to find somewhere that you could buy just his name. Think for a house for 500k it would be £30k stamp duty (3% up to £125k,5% up for between £125-250k and 8% £250k plus). I work in the industry and a lot of people have been caught out by that.