Converting to BTL mortgage

[Matthew]

Hi,

Budding novice investor here, keen to learn. Help with this relatively simple question would be great.

I have purchased a property for £115,000 with a 95% residential mortgage of £109,250 and a 5% deposit of £5750. The purchase price is well BMV as it was bought from a relative. I am confident I can spend £15,000 on the renovation and achieve a modest new valuation of £160,000 resulting in £45,000 of equity in the property. My intention is to then remortgage at £160,00 but with a BTL mortgage. This obviously requires a 25% deposit. Does this mean that £40,000 (25% of £160,000) of my equity is needed to be used as the deposit?

Forgive any misconceptions I have. Can someone explain my options please? I am 28, this is my first mortgage and I'm trying to learn all I can.

An idiots guide answer would be great.

Thanks in advance for your help.

Matthew.

 

[postcodr]

Hi Matthew

Unless you need or want to release equity for further investments, your most cost-effective option might be to ask your current mortgage lender to give you permission to let? It's unlikely, but worth a try.

Otherwise, you're looking at a BTL mortgage with associated fees for current mortgage redemption and new mortgage arrangement etc.

Regards
Dave

 

[totallyproperty]

Hi Postcodr

Some very useful comments there - many people automatically assume there is no difference between a traditional mortgage and a BTL mortgage. Check the small print and the charges!

Regards,


Mark