Buying second home with mortgage on first

H

Humpty Dumpty

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Some advice,

What type of mortgage would one need to apply for if seeking to buy a second home, while still having a mortgage on the first.

If the first is to be rented out to live in the second does this need to be changed to a buy to let?

What are the possibilities in this circumstances?

TIA
 
There are a few threads on this already, take a look at threads like this. In essence though it is just a standard mortgage you will require for the second, your loan to income and loan to value calculations will factor in the outstanding mortgage on the existing property so you will need sufficient income to comfortably cover both. Some lenders may take a percentage of projected rental income into account as earnings.

The existing mortgage likely has a clause stating you should inform the lender if it is no longer your principle residence at which point they may move you over to an investor mortgage at a higher rate. In practice, it seems lenders aren't actively monitoring this and if you don't tell them and keep up the payments they'll leave you be.
 
A more fundamental question is why would you want to keep your former home as an investment?

In most cases, you are better off selling it and lowering your borrowings.
 

Key Post - Keep property as Rental or Sell?

Updated May 2020 The question regularly comes up on AAM whether somebody should keep an apartment that their family has outgrown as a rental or whether they should just sell up. Borrowers often run projections on the anticipated rental income from an apartment with a cheap tracker and conclude...
www.askaboutmoney.com
 
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