how much

confused31_2 · 12 February 2009 at 4:55PM

we have got a house currently for sale i have spoke to the bank and their valuation is 150,000 pound.

Now we owe about 50,000 pound mortgage and i phoned them up today and they have told me i can rent it out for up to 3 years on the current mortgage deal.

rental income will be 600-650 pound a month which will easily cover the mortgage payment and thats repayment not interest only.

I also aked if i could take equity out of the house to get a new mortgage and they said yes up to 76000.

They also told me i could borrow up to 151000 pounds with the earnings we are on as it would be just like having a new mortgage, but we only need 110,000 if we are taking the equity out of our other house.

Im confused now can anyone shed some light on this???

The thing is we will take 540 after the fee if we rent it out and after the mortgage is paid we will make about 200 pound.

the new mortgage as we are looking for properties about 180,000 pound will be for 104,000 pound and will be 564 pound a month minus the 200 pound of the rent so it will be 364 pound a month.

are my sums correct or am i wrong, i know its a lot of hassle renting but we will be a lot better off if we do, the bank told me they will need to see the tenant agreement before proceding.

Robert_Sterling_3 · 12 February 2009 at 5:11PM

I am not answering your question others will.
I will point out that at present you have £100,000 equity in one house.
This equity may be and probably is decreasing.
You are now considering buying another property.
This will enable you to lose equity twice as fast.
This is not a road down which I would willingly go.

confused31_2 · 12 February 2009 at 5:25PM

Robert_Sterling wrote: »

I am not answering your question others will.
I will point out that at present you have £100,000 equity in one house.
This equity may be and probably is decreasing.
You are now considering buying another property.
This will enable you to lose equity twice as fast.
This is not a road down which I would willingly go.

im in it for the long term, so its a risk we are willing to take, the house we are after was up for 269000 now its down to 215000, and we will offer 180,000 if we can rent ours out.

if they dont accept the offer we will just rent ourselves, but we need something bigger.

getmore4less · 12 February 2009 at 6:23PM

£150k, £600pm gross yield 4.8% Thats low for a rental.

£76k+£50k is £126k and your net income is £540pm so a net yield on borrowings of 5.1% before any voids and other cost.

So if interest rates go up to over 5% you are losing money and that does not include the opportunity costs of having another £24k(reducing) tied up in the place.

Looks marginal and if you become a forced seller(loss of income) this could be very costly.

While interest rates are low you will almost certainly be taxable income on some of the rental so don't forget to factor that in.

confused31_2 · 12 February 2009 at 6:53PM

getmore4less wrote: »

£150k, £600pm gross yield 4.8% Thats low for a rental.

£76k+£50k is £126k and your net income is £540pm so a net yield on borrowings of 5.1% before any voids and other cost.

So if interest rates go up to over 5% you are losing money and that does not include the opportunity costs of having another £24k(reducing) tied up in the place.

Looks marginal and if you become a forced seller(loss of income) this could be very costly.While interest rates are low you will almost certainly be taxable income on some of the rental so don't forget to factor that in.

Im not really in it to make money, if i can get someone in my house and get them to pay my mortgage anything else will be a bonus, even if i take the equity out of the house 76000 pounds, the house will still have to drop another 20%, before it goes into negative equity.

The payment for my other mortgage will be easily affordable, and im thinking in 10 years time the one house will be paid for, and whatever we get then will be a bonus.

Also has its in two of our names we are entitled to so much untaxable income and i dont think 200 pound a month between 2 of us will fall into that bracket.

getmore4less · 12 February 2009 at 7:13PM

confused31 wrote: »

Im not really in it to make money, if i can get someone in my house and get them to pay my mortgage anything else will be a bonus, even if i take the equity out of the house 76000 pounds, the house will still have to drop another 20%, before it goes into negative equity.

The payment for my other mortgage will be easily affordable, and im thinking in 10 years time the one house will be paid for, and whatever we get then will be a bonus.

Also has its in two of our names we are entitled to so much untaxable income and i dont think 200 pound a month between 2 of us will fall into that bracket.

Say this place is worth £150k and could sell tomorow for that amount with say £10k of costs.

Ask yourself would you borrow £126k and invest £14k of your own money then rent it out?

(adjust the figures for your actual borrowing just keep the total at £140k

Whats this untaxable income you speak of?

You can offset interest from the mortgage(not the repayments) and some expences

lukekelly_2 · 12 February 2009 at 7:16PM

Im not really in it to make money

What are you in it for?

confused31_2 · 12 February 2009 at 7:21PM

lukekelly wrote: »

What are you in it for?

so we can move to a bigger house

silvercar · 12 February 2009 at 7:24PM

we have got a house currently for sale i have spoke to the bank and their valuation is 150,000 pound.

Now we owe about 50,000 pound mortgage

I also aked if i could take equity out of the house to get a new mortgage and they said yes up to 76000.

So your total borrowing will be 126,000 on 150,000 valuation ie over 75%.

Who is this lender that is allowing BTL with less than 25% deposit and MEW for property purchases????

confused31_2 · 12 February 2009 at 7:34PM

getmore4less wrote: »

Say this place is worth £150k and could sell tomorow for that amount with say £10k of costs.

Ask yourself would you borrow £126k and invest £14k of your own money then rent it out?

(adjust the figures for your actual borrowing just keep the total at £140k

Whats this untaxable income you speak of?

You can offset interest from the mortgage(not the repayments) and some expences

If i had the money i would buy, the place is only costing me 50,000 pounds at the moment.

If i could pay out 50,000 pound and then garantee myself 150 pound a week for the rest of my life i would, wouldnt you???

Whether i get taxed on it or not as long as i get enough rent to pay the capital and everything else i am not bothered.

Basically all i will be doing is getting another house, like a firt time buyer, but i will be using the equitry from my other property to secure my mortgage.

Financially i will be the same but in ten years time i will own one house and be half way to owning another.

I could understand it being a problem for someone who has not got a lot of equity but we have got 75% equity.

Im going to go through the figures tomorrow, but all being well and we get a tennant in, our mortgage payments will be about 500 pound a month and we can easily manage that.

And the other thing is when we are a bit older and the mortgage is paid we will have a little pension fund in the one house.

confused31_2 · 12 February 2009 at 7:38PM

silvercar wrote: »

So your total borrowing will be 126,000 on 150,000 valuation ie over 75%.

Who is this lender that is allowing BTL with less than 25% deposit and MEW for property purchases????

nationwide have said we can take 76000 pounds of equity from our current house and put it to another purchase.

They have told us we can keep our current mortgage deal and rent it out for three years.

so basically it is right if our house is worth about 150,000 pound and we have paid off 100,000, the nationwide said they will lend us 75% of the equity, which 75% of 100,000 pound is about 75000 pound. im not sure of the exact figures but they seem right to me.

how much

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