Let to buy?

chocoholic1_2

Hi, I read on here somewhere about a let-to-buy mortgage, I've searched for ages but still can't find any more details.

Basically we are relocating. Oh wants to buy a home in our new location - he sees renting as 'dead money' especially when our rental payments would be more than a mortgage.

We have our house on the market, had a buyer but it fell through due to it being underpinned. And now we are running out of time. A friends daughter (lovely girl) has been round today with a view to renting it. So I was wondering if it's possible to rent our flat and buy somewhere new.

House valued (by previous buyers surveyor) at £135,000. We have £65,000 mortgage left, so an equity of £70,000. The rent would easily cover the mortgage, but would only just cover it if we have to move to a new rate.

We also have £25,000 savings for a deposit, plus money for fees. We have seen a house on the market at £129,000. We also had a mortgage approved by the Halifax (who we want to stay with) for £95,000 but that was when we were using the equity from the flat sale, so had a different LTV.

Is it possible to buy a house and let ours out?

23rdspiral

oh, i'd like to know aswell please!

lowtidesurf

Quite alot of banks are making Buy to Let Mortgages Harder and Harder to get. I have looed into the Buy to Let Market before I decided to buy my own place.

Your best bet is to go and see a whole market mortgage advisor and discuss the cheapest option.

I would suggest that you treat your old house as a buisness. Re-mortgage the whole property with as small a deposit as needed. Get a intrest only buy-to-let mortgage and the rent should cover this payment. Rent being payed will be considered an Income and will be taxable so be careful that after expenses, i.e mortgage intrest, your income does not exceed 35k including your current job as this has alot higher tax.

chocoholic1_2

Thank you Lowtidesurf, thats very helpful.

It would be a last resort, but it's helpful to know it's an option.

We would be well below the higher tax braket, so don't need to worry about that.

silvercar

Ideally you get consent to let on your current mortgage. That way you are less likely to face an increase in the rate. Your lender is nore likely to be agreeable as you have equity in the property. Present it as a temporary measure until the market picks up. Lenders are often agreeable to consent to let for upto 3 years.

Then you get a new mortgage for your new place with your savings as a deposit.

If that scenario doesn't work, try and increase your current mortgage (though this may involve getting a BTL mortgage) to take some of the equity to bolster your deposit on the new place. This should mean you get a lower rate mortgage on the new place. So in terms of costs it is swings and roundabouts.

Pigmy

I agree with Silvercar - your best bet is to tell your current lender that you are going to rent the property as you can't sell it. Then take out a new mortgage on your new place.

chocoholic1_2

Thank you all. I've just realised this might be better on the mortgages and endowments section - will repost over there. Apologies for double posting.

Thank you again for your posts.

ManicMum

Hi there

i have been in same situation as you and would say rent in the new area you are going to initially. Rent your current place out.

You don't know if you will like the new area, feel like you fit in, meet new people etc. This is easier in some areas than others. Then you aren't committed to new area and you still have your old place to go back to if you need to. Don't look at short term rental as dead money - not if you are getting rent for your old place. You won't be much worse off, if at all.

I moved to new area and decided to buy after 6 months. It has worked out for us but I still think I should have rented for 12 months instead of 6 to get real feel for areas. Talk to locals,find out about the schools, best areas etc. I learnt lots this way.

good luck

chocoholic1_2

Thank you Manic Mum. Normally I would agree with you, but we already know the area we are moving too pretty well. The prime reason for our relocation is to move back to our families, so we would live close to where my OH grew up, and where his parents still live.

fflsh

Hi, yes it is possible, I have just done the same thing, and completed for both in July. We re-mortgaged our old house as a buy-to-let and to free some of the equity for a deposit for the new house. Didn't encounter any problems with getting the mortgage.

chocoholic1_2

Thank you. It's all such a mess. Life would be so much easier if we could just sell, and quickly. Can't force anyone to buy the place though.