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Stuart J
Stuart J, Solicitor
Category: UK Property Law
Satisfied Customers: 22624
Experience:  PGD Law. 20 years legal profession, 6 as partner in High Street practice
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I bought a buy to let house for £103,000. It's now

Customer Question

I bought a buy to let house for £103,000.
It's now worth £121,000.
If I switched to a new buy to let mortgage, would I need to raise a deposit?
Submitted: 1 year ago.
Category: UK Property Law
Customer: replied 1 year ago.
If the new bank only lent me 80% LTV then that's £96,800.
If the original purchase price was £103,000, am I right in saying I'd need to raise £7,400 to switch lenders? (So that I could clear the £103,000 with the original lender).
Expert:  Stuart J replied 1 year ago.

Did you have a 100% mortgage originally?

When did you take that out?

The reason I mention it is that the criteria has changed and whereas, the buy to let properties, lenders would once upon a time lend quite a high loan to value, that loan to value is now much lower which would mean that if you did move lenders, you may not be able to borrow as high a percentage loan to value as you currently have.

Presumably, you want to raise money for some reason. Have you thought of asking your existing lender if they would give you a further advance?

Customer: replied 1 year ago.
Hello, it was a 100% mortgage. I want to change lenders to get a lower interest rate. I don't want to borrow. I just want to bring my monthly payments down. By switching lenders I could do this. But I'm curious as to whether they would need me to put down a new deposit.
Expert:  Stuart J replied 1 year ago.

Thank you. I felt that might be the case. It is not so much a case of you having to put a deposit down as a case of the new lender not lending you more than 80% (the maximum loan to value varies from lender to lender) . If the new lender will not lend you more then you are going to have to find some money to pay off the balance of the existing mortgage. So, whilst it’s not exactly a deposit as such, you are going to have to find any shortfall difference between the maximum amount you can borrow now and the amount required to pay off the existing lender.

Ultimately of course, the end result is the same that you are going to probably have to find money from somewhere.

I’m not certain whether that answers the question for you or not but I am happy to answer any specific points arising from this. You may get the impression the thread closes after rating, that it does not, it remains open and we can still exchange emails if you wish.

Kind regards

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