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  • Property Yields

    (ROI) Remortgaging for a BTL mortgage deposit

    So I'm going to remortgage my residential home to raise a deposit for my first buy to let (approx 40k) in around 2 years.
    Im playing around with numbers to work out my ROI,
    So my question is..... How do I factor in equity into my money in invested calculations, as effectively I Will have a 100% mortgage on my buy to let property
    (25% through my remortgage and 75% through my BTL mortgage).
    Will I need to add in the add in the interest I'm paying on my deposit (40k) or even possibly higher mortgage payments on my residential home?
    Could you help and give an example please?
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    I think If i understand you correctly you are struggling to include the additional mortgage interest that you will have on your existing property in your ROI calculations on the new BTL? I would isolate the two. Ie. Treat the new BTL as a separate investment - work out the Net profit and the total MONEY invested as apposed to thinking of it as ‘equity.’ If the BTL ROI is decent it will easily offset the additional interest.

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    Really helpful! Thanks for your reply, don't want to be stuck in analysis paralysis.

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    If you’re following the buy refurbish refinance model you’ll always end up paying more on the interest when you refinance but you’re acquiring more property and adding more value (hopefully). I tend to leave a minimum of 25% in and work to 15-20% ROI. This will depend on your area and strategy though. 

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