Buying a new house and letting out the old one

boybeck

I'm after some advice please.

I have a house worth £150,000 with a £43,000 mortgage.

I want to buy and move into a new house with my partner. We want to spend £100,000 each. I will then rent out my original house

How could this work mortgage wise?

Should I remortgage equity from the original house?

Will the mortgage on the original house turn into a buy-to-let?

Just after some of your opinions really.

Thanks

Ian_W

If your present mortgage doesn't have tie-ins that it's probably better to remortgage to a BTL for your present house. Max is usually 85% of the value which would give you £127.5K or £84K after your current mortgage is paid off, obviously you don't need to borrow that much.

Lenders generally look for the rent to be about 1.3x your mortgage repayment, so if you did borrow the max you'd pay £530pm [at 5%] in mortgage and the lender would expect the rental of your house to be £690. You need to find out if your house would let for that much, get a letting agent to give you an idea or check for similar props in the local paper. Obviously if you borrow less your rental needn't be as much.

It certainly looks do-able. Only caution is a lot of areas have a glut of rental props with the BTL boom so you need to decide if it's worth it. Personally I'd be looking for 1.5x the mortgage to cover other exes like agents fees, empty weeks repairs and maintenance.

HTH & BoL.

boybeck

Thanks for the advice Ian, I'm think I'm going to try to remortage as much as I can while satisfying the mortgage company with the amount of rent.