Wanting to move into another house... Advice required

afc1903

Hey Folks,

Never post on here just browse but now is the time to ask.

Me and my partner are looking to move into a house but really haven't a clue how much we could afford in terms of what we are paying just now for our 2 flats and outgoings .. So hopefully someone on here to give us just a little insider knowledge.

Flat 1 : Surveyed at £140k (recently) .... Mortgage of 80k left over 18 yrs ( this is currently being let out to a friend for £750 )
Flat 2 : Surveyed at £120k (recently) Mortgage of 75k left over 17 yrs Currently we stay in this but would look to rent this out also to cover the mortgage and put the extra in to reduce the mortgage payments.

Both our combined salaries stand at 60k after tax per year, So the question or questions ... What are the options .... Can we buy another house and put the 2 flats as a deposit ? ... If so how much of a mortgage could we get ?

Sorry guys, This may sound stupid but I've trawled the net and can't really find anything to my answer my questions, Just looking for options

Thanks

Fire_Fox

Do you have BTL mortgages on either of the flats sorted? You need the permission of the bank to let your ex-home. Also may need the permission of the managing agent/ freeholder depending upon the terms of your long lease. Have you informed the taxman of your rental income and taken this into account in your sums? Have you accounted for vacant time between lets in your sums?

You will need a deposit and fees for the new property unless you can remortgage one of the flats to release capital (NOT saying this is a good idea). You can't just use the equity as a deposit whilst it remains where it is, as presently it is being used as security against the two mortgages you already have.

Not sure why you'd want the stress of three mortgages - what happens if two properties are vacant simultaneously? What happens if you fall ill and can't work or your partner becomes pregnant accidentally? Can you afford to run three houses then?

david29dpo

As above but do you have any saving now? If not i would save like mad (quite easy on £60k net!!) Buy the time you have a decent deposit prices may have bottomed out. As for a mortgage, 3 times gross income is the norm.

afc1903

Thanks for the replies guys,

On Flat 1 we don't have a BTL mortgage, It's just a friend that's staying there at the moment. But when the time comes will I need to move onto a BTL or can it remain the same ?

I've not informed the taxman of this other income I should really declare it now to be honest )

We've got about 10k saved, So I might go down the road of waiting another year (saving etc ) and then go about getting a mortage then.

Thanks again guys

Mini_Bear

Eak OP you have just admitted fraud! Im not gna be the one to storm in my high horse as i know several people in the same position as you "accidental landlords" moving in with partner and not wanting to sell their property so renting to friends to pay off the mortgage.
My advise would be work out how much the taxman will take of ur rental income if u went legit (i assume u r higher rate taxpayers so 40% - minimum). also look at the price of BTL mortgages (the fees and rates are a lot higher than residential mortgages at the mo).
Work out if all this costs in and u could afford a house on top.
I think the hassle of it all (as u both wrk) wud make it not worth it.
Surely its better to cash in the equity u do hav and put it towards the new house?

getmore4less

You need to get the tax sorted, expecialy as you are planning to get another place so this is long term business not a accidental landlaord anymore.

I would get the 2 places paying for themselves borrowing as much as you cna to keep the tax down.

Then do a SOA for your current income asuming outgoings are on a new place(estimate high), and that will tell you what the max is you can afford.

then factor in safety, jiob loss, rental voids etc and come up with a level of borrowing you are comfortable with

£60k net is good but if you spend a lot of that there is less to fund housing.

How much savings do you have allready? you will need a deposit for the new place.

edit: missed £10k so not really enough to look at places around the £100k+ 20% would be better.

With £75k mortgage I would expect you to be saving £3k+ a month


You can't use flats as a deposit you need cash.

Fire_Fox

afc1903 wrote: »

Thanks for the replies guys,

On Flat 1 we don't have a BTL mortgage, It's just a friend that's staying there at the moment. But when the time comes will I need to move onto a BTL or can it remain the same ?

I've not informed the taxman of this other income I should really declare it now to be honest )

We've got about 10k saved, So I might go down the road of waiting another year (saving etc ) and then go about getting a mortage then.

Thanks again guys

It doesn't matter that it's a friend staying at the flat. Flat 1 is no longer your main home, you need the permission of the bank and possibly the freeholder to let it. You also need to have any safety certificates in place, to inform the taxman and your insurance company. The income is presumably traceable through your bank account, also your friend will be named on the council tax and flat 1 and you and your partner on the council tax at flat 2 ....