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  • Mortgages & Finance

    Extract equity from main home to purchase BTL

    Hello,

    I currently have under 4 btl mortgages all in my own name (3). I would like to now raise funds against my mortgage free main residence to buy more btl properties which i have agreed purchase prices on. How should I best do this?

    I have read that once one has 4 mortgages your whole portfolio will be critiqued and i may not be able to borrow as much as I can compared to having under 4 mortgages. If I remortgage my main home on a buy to let basis I will then have reached 4 mortgages. Then my btl purchase for the properties I have under offer would be 5th and 6th mortgages. As i would like to do this all simultaneously, Are there any lenders who may consider this application in one go and not restrict or rather maximise my borrowing potential on this plan to remortgage my main home and make 2 purchases?

    Thank you in advance for your assistance.

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    Main thing to watch out for is further down the line when you come to remortgage no.1-3

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    DISCLAIMER just my personal opinion - for legal advice consult a qualified professional grown-up.

    First thing is to apply the new PRA stress test to your current portfolio, if they don't pass that, don't waste time applying for further BTL mortgages for now and deal with it first.

    Once you buy the 4th property, you choices of lenders gets a little less. Most allow 3 to 4 BTL. So slightly higher interest rates.

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    Hi Yield Investor, the new PRA rules do mean the rules surrounding the background properties have changed and these will need to be taken into account, but this is something I can help you with.

    I can review the current mortgages and give you options for the new ones, with companies that will allow this based on your personal circumstances and 'portfolio'. Call me on 07581794922

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    Jenny Reeves

    Property Tribes Financial services

    You can contact me via Direct Message, or 07581 794922 or call the team on 01206 654444 for personalised quote and advice


    Hi yieldinvestor

    Yes the above posts are right. Portfolio lending rules are now biting. They are designed to ensure that the professional landlord with no other income can survive with a shock/downturn in the property market. If your name is accurate then I assume you will probably be fine with this but you will tend to find the LTV on BTL portfolio properties going forward will be lower (or at least harder to secure). You should consider this so that you are still a yieldinvestor after the initial BTL product period expires on your existing portfolio.

    The tax issues are also a greater concern to lenders in your case. I am sure you are all upto date but stress tests of portfolios in personal names are harder.

    Despite that there are lenders who put two fingers up at the Bank of England as they are not regulated by them - but tend to charge a small premium. As you are looking for yield (so I assume not letting out central London property where the yield might as well be 0%) I think you will be fine.

    Please give me a call if you need any help.

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    Tax advisor and mortgage broker

    stuart@johnsonsca.com

    02039077022


    To put your main residence which is mortgage free on the line to buy more property at this time is financial suicide. Properties going down, rentals no longer so secure ( people losing jobs, not willing to pay high rents. government intervention) and finally interest rate increases which are coming, will hit many leveraged in the property market. 

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    Hi thanks for the replies but I was hoping for some advice on how best to proceed strategically and some of the logistical hurdles of obtaininv 3 mortgages at the same time I.e. use 1 lender for the remortgage and 2 purchases at the same time.

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    Yieldinvestor,

    You seem to be saying in your main post that you will be putting a btl mortgage on your current residential property. This raises more questions not mentioned so far. 

    Where will you be living? A new residential? Or staying in your current property? This will not be possible under the lenders t&c's. If you are raising equity from your current residential property, and you plan to continue living in it, it will need to be mortgaged on a residential mortgage.

    Please feel free to call for a chat with the options. We can help you with this.

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    __________________________________________________________________

    BTL's, residential mortgages, bridging, life cover and estate planning  

    http://www.hdconsultants.net        

    For Commercial Finance, complex BTL and HMO funding, development finance, international and expat mortgages, and portfolio BTL mortgage services Assured Funding website.

    Telephone: 07751042485      01206 654444


    Hi yieldinvestor,

    The test for classification as a 'Portfolio' landlord is not how many mortgages, but how many BTL properties you own. So, even if you owned 10 BTLs mortgage free, buying the 11th one with a mortgage, you would be classed as 'Portfolio' and that mortgage would be subject to the additional tests.

    In terms of your current situation, there would be a 'Portfolio' stress test applied to the purchase mortgages of the 5th and 6th properties (your 4th and 5th BTL properties). The test is not applied to the remortgage of your main residence. You cannot remortgage your main residence on a BTL basis; you would be in breach of your mortgage conditions (unless you are moving out and do intend to let it).

    In my experience, the purchase mortgages for acquiring the next two properties should be straightforward enough; no need to be unduly put off by the additional requirements of 'Portfolio' borrowing - it's really not that difficult. The issue I would foresee, would be raising a large sum against your presently unencumbered main residence. This would be Ok if you have sufficient earned ie. NOT rental income. If you are largely relying on your net rental income to pay your living expenses, a large remortgage against your main residence will not be easy to obtain.

    Happy to answer any more queries you may have on this.

    ​Nick@Kinetic Money

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