Buying another property?

bash_2357

Hello everybody

This is my first post so please be gentle! I wonder if all the experts out there can offer some advice.

We own a property worth about £180-190k. It has a mortgage of about 70k left ( with NR on their SVR – currently tied in). We have seen a place that we are interested in for £230K. We want to buy this place without selling our current place. Is this realistic?

The idea is to put our current place on rent, we should get around £750 per month – this would cover our mortgage (around £530 per month – this should go down when we remortage as soon as we are allowed to ) and take out a new mortgage for the new place.

We would like to keep our current place as a kind of investment for our children, to pay for their education.

We have around 30-32K in savings and I earn about 38K per year. My wife does not work.

Can I do a self-certification mortgage? What do others think? Is this a crazy idea?

Thanks in advance

Robert_Sterling_3

I think your idea is a "goer".

bash_2357

Does anyone know if i can get this kind of mortage?
It will be over 5 times by salary!

Thanks

herbiesjp

Do you have any other income sources that you can take into account?

bash_2357

No I don't!
Can i not use the extra income i could potentially get from renting out the other property?

GDB2222

Hello everybody




We would like to keep our current place as a kind of investment for our children, to pay for their education.

We have around 30-32K in savings and I earn about 38K per year. My wife does not work.

Is this a crazy idea?

Yes, it's nutty! Sorry to be rude, but you are taking an enormous risk. You are more than doubling your exposure to the property market at the height of the boom.

You seem to be confusing whether it is possible to do this with whether it is a good idea.

Affordability: You will need a new (extra) mortgage of £180k. If the payments are anything like your present £70k mortgage, you are going to be paying £1300 a month. Can you afford that? (Actually, that sounds a bit high - I would have thought more like £1k per month.)

Profit on existing house: Rent £750 per month against a mortgage of £530. Sounds like £200 per month profit to put towards the mortgage on the new place. But what about the agents' fees for finding the tenants? That's 12% including VAT. So there's £90 of your profit gone.

According to the Association of Residential Letting Agents, voids are nearly 2 months per year on average. So, that's the rest of your profit gone. That's before the tenants trash the place, don't pay the rent and have to be evicted, you need to do repairs, etc etc

Capital appreciation on the new place? Who knows? But more likely to go down than up IMHO.

Moving house because you want more space and can afford to do so is one thing. Keeping the old house on as an investment strikes me as very risky indeed.

Geoff