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I been reading about refinancing to reinvest, and this is something I want to explore.
My property, originally purchased as a residential, is currently on let as I'm currently overseas working.
The property was purchased 10 years ago and has benefited from increase in value. I would like to refinance to take the funds and to invest in another property.
Q1. Is it feasible to refinance given that I am overseas.
Q2. Will I lose my current mortgage arrangement, which is quite favourable as it is a lifetime tracker of BOE +0.79%.
Q2.1. Is it possible to keep the current mortgage but to just increase the borrowing ?
Q3. If then I reinvest into another property, are there any restrictions on time ? I assume the process means getting a new mortgage for the current place and another one for the new place so in total 2 new mortgages.
Any other suggests of things to bee aware of ?
You will be glad to hear that you do not have to change your lender.
I assume that you have permission to let your house from your existing lender; this is called Consent to Let.
You may well be able to take a further advance from your current lender, whilst keeping the initial mortgage in place.
You would then use this additional money as your deposit for the new BTL property.
Of course, different lenders have different criteria on this situation. However, we know the lenders who will, and won't lend in these situations.
If you would like to investigate this situation further, please feel free to contact us on 07751042485 or 01206 654444.
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I am quite certain that my current lender knows the property is being let out.
I think I did tell them before I went overseas - but I am unable to find any details of this in my records.
What is the consequence of this ? Could this cause a challenge to me seeking an extension on the current mortgage.
Worst still, would it cause an issue to the current mortgage itself ?
I have never missed a payment. My mortgage is with my bank and so they see my bank history as well
this is unlikely to be an issue in my opinion. I would check with them now, if I were you. It was probably one of those things (amongst many other things to do at that time) that you may have done on auto pilot and forgotten.
There may be a slight change in rate or the lender may impose a relatively small one off charge. The Consent to Let may be for a short period (couple of years) or it could be much longer.
I think if you are seen to be doing the right thing, the lender will be understanding, especially as you have moved abroad and there is an understandable reason for letting your property.
The conversation with the Bank didn't go too well. Seems a lot has changed since when I first got the mortgage, which was 10 years ago. Also turns out that they were not aware that this was being let out, and even though this is my residential home but as I am currently overseas so rent it out - if I attempt to do anything I will have to switch to a less favorable mortgage on BTL terms.
A possible way forward is that I rent it out to family, which was a plan I am working on anyway. But I am not looking to move my family members in until the current tenancy agreement expires - which is Feb 2020, so seems I cant start borrowing more to expand the portfolio until then
I can definitely see you perspective. GBP has weakened making UK property more attractive for those working overseas.
using your numbering.
1) yes but the full pool of BTL lenders would not be available to you so likely rates would be a bit higher
2) if you refinance then the current loan is repaid and you are on a product which is based on the current market which is unlikely to be as favourable particularly as you have effec5iveky a BTL mortgage using a residential mortgage with consent to let.
2.1) yes top your existing mortgage if there is room to do so and your existing lender agrees. This means you have two rates on your current mortgaged property. The current one based on a historic deal and the top up which will be based on a current product.
3) there is unlikely to be any restrictions but the new lender but I would structure the new purchase to complete simultaneously with the new funds. It’s not uncommon.
Your starting point will be to find another property and see how much you can borrow in that so you know what you need to release from your current property.
i assume your tax affairs are up to date. If your UK income is below the personal allowance so you don’t have to do a tax return I would suggest you still do one so that there is a record of it with HMRC as lenders are llikely to check.
If you need any help with the mortgages or the tax please give me a shout.
Chartered Accountant, Tax Advisor and Mortgage broker
(and BTL portfolio owner)
(1) As an 'ex-pat' you can get mortgages so long as you meet the fairly standard criteria. There are about 15 lenders to choose from but generally dishing the rates/fees are not as good as for normal mortgages. Just to set expectations a bit.
(2) Keeping your current mortgage and getting a further advance is down to your existing lender. If they do not accept ex-pat then they will decline any application unfortunately. But it is always worth asking and if possible it is likely to be the cheapest way...but most lenders do not accept ex-pats.
(3) There is normally no destruction on timings. My normal advice would be, assuming a remortgage is on the cards, to start the remortgage process with a lender whose mortgage offer is valid for at least 3 months. The idea being that you get the remortgage ready whilst looking for the next property. You only need the remortgage to actually go through before the offer expires and a few days before you need to give your deposit on the purchase to the solicitor. But there is nothing to stop you putting through the remortgage whenever you want. You might just have money sitting in an account for a while whilst you are not using it. Some lenders may want evidence you have a subsequent purchase lined up. So for that reason and the fact that ex-pat mortgages are not easy to source properly I would get a broker to do this and make sure he/she checks into these sort of things up front.
I hope that helps,
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