Hi, need some help with slight mortgage let down today. Basically i live in mortgaged flat for 8 years valued at 105k my HSBC mortgage now fixed for 2 more years at 5.79%, so pretty good deal. £1200 quid to get out though.

My Girlfriend has moved in for last couple of years and we now have a little one and needed too move so made jump last week with a new build. got 3 bed 3 storey for 194k from 214k. really good build and know one of the neighbours paid 214 in May so pretty chuffed. Had to go with builders IFA as we done a jumpstart scheme where they (builder) put down 25%. IFA got us pretty good deal at 5 yr fixed for 6.39%.

With regards to the flat i have had it on market for couple of months, but not 1 single enquiry. I am able to rent though to the first person who walked in the door as inundated with people wanting to view. So renting it will have to be.

Now the problem. I need to consolidate 12k worth of cc debt and 5 k to move with. So 17 k in total needed. Spoke to IFA who said go to HSBC my mortgage provider on the flat to free up the equity. They kindly refused!

This would have been good cause interest only would have been under £100 per mth, and in 2 years i could relook at the flat as a whole in terms of mortgaging.

HSBC did say Buy to Let was an option although i believe this is because it would cost me 3k in fees.

I would welcome any suggestions. We both have immaculate credit history. Hopefully im thinking 2nd mortgage as a route. or is a Secured Loan viable ? (I am a bit weary of some of the companies on the web.) Really do not want Personal Loan or CC as monthly payments way too high. My salary is 25k and partners is 13k.

Willingly await any replys! Many thanks.

Hi....I think that you will find that your new mortgage is based on the assumption that the existing property will not be a liability(sold). The affordability does not stack up as it is, if you rent the flat and it covers the mortgage it will have to proven before the new mortgage completes. If you start putting second charges on a rented property it gets very complicated, almost impossible. The IFA you saw originally should be able to help you if he knows his stuff, if not try another one. In my opinion if the flat is not going to sell I would look at the BTL option, this way you may be able to consolidate and continue with the purchase. I do have reservations about affordability should the flat not be rented for any time??

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Regards

Ian

Thanks Ian for coming back much appreciated. However slightly at diff wave length i think. i can def rent this out. Agency has 3 people wanting it and rent income will be 500 after their fees. I haved proved this with new mortgage no problems. My troubles are whether to go with an Ocean Finance or similar to save fees. I know i can get BTL but prob cost me to get out of fixed deal 1.5k and set new one up prob 1k. do you think they may hike variable rate massively? Many thanks again

Hi....so long as the rental will cover the mortgage payment and you are happy that there will be no vacant periods then affordability may not be an issue. However the new lender may well want to see tenancy agreements set up and the property rented, unless the new mortgage is a "let to buy" product. This will allow a second purchase based on the rental assessment of the current property without proof of rental??? I stress these points because applications have a funny way of going "t*ts up" when the underwriter gets hold of the case and starts to ask questions.

On the point of further borrowing I would wait until the mortgage has completed to ensure a smooth completion. If HSBC are happy to consent to lease, should you tell them, and there is enough equity to assure a second charge then this may be less expensive initially, although the secured loan will be difficult to place on a rented property. You see the difficulty in advising unless one is completely aware of all circumstances. I would wait until the purchase goes through and then see how the land lies, but I do see problems ahead I'm afraid.

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Regards

Ian

ok Ian, thanks once again. Ill take this one as a challenge. must admit i have done maths throughly and affordability will be tight but thats life i suppose. If you move up in the world then things like takeaways become monthly instead of weekly. im gonna go the Secured Loan route and give it a whirl. I have made new lender aware that im renting this and letting agency have provided proof via letter. Hopefully this way in 2 years i can pay SL with minimal fees and worry about remortaging flat then (with minimal fees). Thanks for your input, truely appreciated, ill keep you posted how i get on.