Can you borrow money against your house to buy another property?
Yes, you may be able to borrow money against your current property to buy another property but this will heavily depend on if your current property is mortgaged or not and what type of mortgage you want to get with the second property.
You could be looking to a let to buy mortgage which is where you let out your current property and buy another one or a buy to let mortgage which is where you simply buy a property you let out.
If your property is mortgaged
If your property is mortgaged then you may need to get a remortgage and your current mortgage lender may not let you release funds for the purpose of buying another property if you cannot prove that you can afford both of your mortgage repayments which you have after you have remortgaged your house to buy another property.
Your current mortgage lender may not offer you a remortgage to buy another house but you may be able to find other mortgage lenders who may be willing to lend to you based on these circumstances. You may want to speak to a mortgage broker early on to see what lending options you have in regards to getting a mortgage.
You also will need to consider if you will be eligible for a new mortgage. Will a mortgage lender be willing to lend to you knowing you have another mortgage?
Your mortgage affordability will have to encompass both your current property and your new property.
If your property isn’t mortgaged
If your property isn’t mortgaged then you may be able to borrow money against your house to buy another property and this may be much easier.
You should speak to a mortgage broker to see how much you may be able to borrow against your property to buy another house.
Borrowing money against your house for a buy to let
If you are borrowing money against your house to buy a buy to let property then you may find that it is easier to get a second mortgage if the second mortgage is a buy to let mortgage.
You may find it easier to get a buy to let mortgage whilst having a residential property.
Buy to let mortgages will usually focus more on the buy to let properties ability to make an income although the mortgage lenders will still consider your ability to cover the mortgage repayments if the property is unoccupied by any tenants for a prolonged period. This could be 3 months to 12 months.
Different buy to let mortgage lenders will have their own different buy to let mortgage affordability requirement.
In this case, getting a second mortgage may be much easier.
Can you borrow money against your house to buy a second property if you have bad credit?
Borrowers always wonder if they will be able to assess more money by borrowing from their house and how having bad credit could affect them.
Depending on what kind of bad credit issue you have them borrowing money against your house to buy another property could be possible but you may need to speak to a mortgage broker who can assess your issue and give you guidance on if you will be able to borrow money against your house.
Your ability to borrow money against your house will depend heavily on what type of bad credit issue you had and how long ago it was. Some mortgage lenders will have their internal eligibility criteria dictating how much they may be willing to lend and what loan to value rates they could offer based on the bad credit issues you may have had or still have.
One thing you should take into consideration when looking to borrow money against your house to buy another property is that you may find the mortgage lender may expect you to have an unmortgaged property or if you have a mortgaged property then the mortgage lender may want to see that you have a substantial amount of equity in the property and you have kept up to date with all your monthly mortgage repayments.
With a bad credit score or history, you may also not find too many mortgage lenders who are able to offer you rates which are competitive.The interest rates on bad credit mortgages will usually be higher than that found on standard repayment mortgages but you may still be able to find something competitive based on your circumstances.
You may want to speak to a bad credit mortgage broker. To see what options you have available to you.
Bad credit could include:
A debt management plan
A home reposession
Are there stamp duty considerations when remortgaging to buy another property?
Yes, you should seek tax advice on what stamp duty liabilities you may face by owning two homes.
Can you borrow money against your house to buy another house if you are self-employed?
As long as you are able to show that you can make your monthly repayments then you may be able to borrow money against your house and buy another house.
Self-employed borrowers usually face difficulty in showing the lender that they have a reliable stream of income.
You may want to consider using a self-employed mortgage broker to prepare your application when considering if you can borrow against your house to buy another property.
If you need financial advice and you live in the UK then you could contact the Money Advice service over the phone or via chat for impartial advice.
You can also contact the debt charity “Step Change” if you are in debt and need help.