Want to buy a new PPR but keep existing property - what mortgage can I apply for?

C

Calico

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  • I live in a one-bedroom apartment with a mortgage in the city.
  • I have a two-bedroom apartment with no mortgage in the country.
  • I am considering selling the two-bedroom apartment and using the proceeds as a deposit to buy a small house with a mortgage

My question:
  • If I wanted to hold on to the one-bedroom apartment, how would the mortgage process work?
  • Would I need to apply for a BTL mortgage property to buy the house?
  • Would a bank give me a residential mortgage (based on my existing income) to fund the house purchase, and at the same time, convert my existing mortgage into a BTL?
 
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If you are buying a home to live in, then the bank will you a home loan mortgage. They will look at your total borrowings so the mortgage you have on the one bed will restrict the amount you can borrow.

The mortgage contract would allow the lender to convert the existing mortgage from PPR to investment, but in practice, they don't do that.

It might be safer to apply for a mortgage to buy your new home with a lender other than the one you have the one bed with.

Brendan
 
But ask yourself the bigger question - should you hold onto the one bed as an investment?

Would you be better off using the proceeds to buy a bigger home for yourself or to have a smaller mortgage?

Brendan
 
Hi Brendan....that's interesting.

My proposal only works if the bank would agree to covert the mortgage on the one-bed (which has a LTV of about 60%) into a BTL....and then, at the same time, let me use my income to borrow a new mortgage for the bigger property.

I would have a c.50% deposit (from the sale of the non-mortgaged property) and the one-bed mortgaged property is in an area of high-rental demand, so probably a good BTL proposition, but my logic may be flawed or the bank may not consider it.

In these inflationary times, holding on to the property as an investment would seem like a good idea....and I like the idea of having something which will generate an income for retirement planning purposes....but no-one can say with any certainty.
 
You would need to provide all the numbers for someone to give you an informed answer
Value of one bed property
Amount of mortgage
Lender

Value of mortgage free property

price range of property you want to buy

Current salary
 
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