Releasing equity for first buy to let

[garwelsh]

Hi
After much research and thought, I have found a property that I think will be good first time buy to let. My partner and I could cover the interest only mortgage repayments (in the worse case scenario that we have trouble getting a tenant) but are now looking for the best way to finance the deposit. Our home LTV is around 40% and our earnings would allow us to get a larger mortgage on this house to release the equity for a deposit on the rental property (still keeping our homes LTV around 60%).
We are thinking of a 25% deposit for the BTL property as we need to spend some money on basic refurbishment (its a repossession).
We would love some experienced advice regarding this, and whether a 'off set loan' would be more suitable (paying interest only or repayment) rather than a full repayment loan added to our home.
I would appreciate your views :confused:

[Always Problems]

Dont forget that interest rates will probably go up to to 5%.

[jeffrey]

Dont forget that interest rates will probably go up to to 5%.
How do you know? Are you:
a. Alastair Darling; or
b. his proposed successor after 6 May?

[rajeshk4u]

There are two different angles... but you should borrow from the cheapest source possible e.g. either your main home or the new rental property. Go for interest only with a mortgage that allows overpayments (this gives you flexibility).

If you can, re-mortgage your existing home to the max and buy the rental property without a mortgage. Due to the credit crunch, it is expensive to get a BTL mortgage. There is no need to pay two sets of morgage arrangement fees etc....

However, it has been pointed if interest rates do go to 5%, then there will be a lot of people in trouble..... So your problem will not only be to maintain interest payments, but also repair and refurbish the property. In today's market tenant expect high standards. So you have to ask yourself is it worth it?. Also, it sounds that you don't have cash for the deposit, if so does it make sense to borrow more money?.

[Gordon999]

Dont forget that interest rates will probably go up to to 5%.

At www.moneysupermarket.com , the best fixed rate for 25% deposit BTL morgage is 4.99% for 2 years and charging a killer 1,999 pds set-up fee.