Originally Posted by KateB1996
Could the first property be used as collateral against the 2nd ?
I'm not sure this will work in that way.
It should be possible to get a mortgage on the first property, and use the proceeds to repay the family debt and act as a deposit on the second home. You can then get a mortgage on the second mortgage on the second house. Each mortgage is secured against a single property. In fact, the 2 mortgages don't even need to be with the same bank.
One issue is that whichever house you are renting out is going to be the subject of a Buy2Let mortgage. That means a higher interest rate and lower LTV, but you may also be able to get an interest-only period.
Another issue is the buy2let mortgage may impact on a banks perception of you as a risk, and that may impact on their willingness to extend a buy2own mortgage.
There is enough complexity here to suggest that a trip to a mortgage broker might be worth while.