New EICR to cover any changes made by outgoing tenant?10:00 AM, 4th May 2021
About 2 weeks ago 95
Hi, I am in need of some thoughts/ideas from the Gurus here.
Wife and I live in our flat in London – Mortgage with First Direct.
About 210k mortgage left, flat value 500k.
Mortgage is being switched to an offset interest only mortgage circa £300pm still with First Direct.
Potential rental income £1650pm from flat.
We are looking to buy a house as our new main residence for around 450k and do it up i.e. extend/refurb IDEALLY before moving in to the place as we have a baby – want to avoid moving into house, then move out during works and back in after all done.
We were thinking if it is possible to remain in our flat during the works and then intend let out the flat when we move into house. With the interest only payments on the flat mortgage being £300pm this would be cheaper and much more convenient than renting somewhere. Once works are completed we then convert mortgage on the flat to BTL/get consent to let, and move into the house. We are financially comfortable paying both mortgages at the same time for the duration of the extension works i.e. say £2500pm on house mortgage of 405k and the £300pm interest on the flat mortgage.
My questions are:
1. Timing – Is it possible to get a residential mortgage on the 450k house purchase at say 10% deposit (so we spare as much cash as possible for the refurb/extension) AND remain in our current flat under the current residential offset/interest mortgage while works are done (say 6-9 months while getting planning permission etc)? Or would lenders require the current mortgage be changed to BTL without any overlap on new mortgage allowed? Thoughts?
2. Assuming above is possible or if some lenders would say yes but require more deposit (say 20%), is there a way to unlock some equity (say 50k) from the flat from current mortgage for the new purchase extensions? Or would we have to consider personal loans (no bad credit history)?
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