Hi
I have finances in place to buy a one bedroom flat outright and rent it out. Could i then use that flat as a deposit for a buy to let mortgage on a second property?

Hi Richard

I don't fully understand the question. So the answer could be yes & it could be no.

Answers to the following questions will help clear this up.

1. You say you have finances in place to purchase the one bed flat. What do you mean by this? Are you purchasing it with cash? Getting a mortgage?

2. What is the value of the flat? & the size of any mortgage? Also, what are your plans for the flat? Let it out? Live in it?

As for purchasing a second property as a buy to let, you will need a minimum of 25% of the purchase price as a deposit. Depending on the above, you may be able to raise this deposit against the one bed flat. Or it may work out better to keep some of the money you are using to purchase the flat back to use as a deposit for the second property, but this would depend on how you are financing the flat.

Get back to me with the above and I will be able to give you more information.

Alternatively, speak to an independent mortgage broker such as myself.

i have the cash to buy the flat outright and rent it out. i was wondering if i could then use the flat, as a deposit, towards a mortgage for another rental property

You can't actually use a property as a deposit. But you can raise finance against property number one to use as your deposit for property number 2.

However, there are potential issues here. You can't remortgage a property unless you have owned it for 6 months. So if you buy the flat outright, you can't raise money against it for the deposit until 6 months after the purchase date.

So the way around this is to obtain a mortgage to purchase the flat, thereby leaving you funds for the second purchase.

Does that make sense? And does that answer your question?

Hi,

I am no expert, but I am in fact, just like you, researchiing into buy to let business.

I think the best bet for you is to pay a deposit (probably the least you can get away with on a good deal obv) and get a mortgage on the first flat, which, depending on the amount of capital you have, should leave enough to get a deposit on another flat - maybe a third if you have enough?