A couple approached me because they wanted to buy a second buy-to-let property.

When I spoke to them, it turned out that they were living in their first buy-to-let and had rented out their former home. They didn’t realise that this is a serious issue, but it is: it’s a breach of the mortgage terms, and potentially invalidates any insurance too.

We unravelled this by switching their former home to a buy-to-let mortgage (releasing cash in the process), and switching their current home to a residential mortgage. We reduced the amount of the new residential mortgage to fit their new lower incomes, and also arranged it on a repayment basis so they are paying down their debt.

Before:

  • 2 properties
  • £427,000 equity
  • £427,000 equity
  • £700pcm interest only home mortgage
  • £80pcm cashflow
  • No spare cash

After:

  • 3 properties
  • £414,000 equity
  • £550pcm repayment home mortgage
  • £650pcm cashflow
  • £17,000 cash in the bank

So we helped them to buy a third London property, reduce their home mortgage, increase their cashflow, put £17,000 in the bank and cover all their costs – with only a £13,000 reduction in overall equity!

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