buy new home + rent out current one

strue

We own our current home (nearly) outright and would like to move. Rather than selling the current home, we'd like to rent out the current one, and buy a new one. Our salaries are not high enough to get the required mortgage on the new property.

All building societies, who we spoke to, said they would only be able to lend a multiple of our current income, and they are neither willing to take into account a potential income from rent (perhaps after 6 months or so) nor are they willing to consider the fact that we have 95% equity in the current home.

Which lenders are happy to look into this?

Steve

MortgageMamma

Hi Steve

Obviously you need to convert your mortgage on your current property to a buy to let mortgage, then look at taking a new mortgage. Do you have a deposit for the new mortgage already or would you remortgage your current house to raise the funds? How much do you both earn? Are you in permanent employment? How much are your monthly credit commitment? whats your credit rating like? how long do you want the new mortgage over and on what type of property at what price? how old are you?

All these questions will help build a better picture fo what you are looking for, and then I might be able to answer if there is a lender that will lend to you.

strue

Here are the gory details:

current residential home (to change to let-to-buy)
value: 280k - outstanding mortgage 13k - projected rental income 1100 pcm
want: raise as much money as possible, interest only
no tie in (propoerty to be sold in 2 years)

new home (residential)
value: 380k (estimate +- 20k)
want to use above raised money as downpayment and raise rest with residential mortgage; should be flexible/overpayment, portable, no tie in, early repayment charges

personal situation
60-70k joint income from employment
no loads/debt, savings: 20k
22 years to retirement

herbiesjp

Your situation indeed looks feasible.

You could probably look at raising £200k off the BTL and then look at the balance from the residential side.

Would that look ok to you?

strue

Thanks: Yes, that's the idea - 175k - 200k on BTL; the rest on the residential. Which lender(s) would be happy for this scenario?

What's the tax implication of letting our current home and moving elsewhere:

When/If I sell my current residential/future rent out property after 3 years do I have to pay tax on
a) the difference of the value of the time of sale and the current market value (when it became commercial)
b) the difference to value at time of sale and value when we bought long time ago
c) the whole value of the property.

herbiesjp

strue wrote:

Thanks: Yes, that's the idea - 175k - 200k on BTL; the rest on the residential. Which lender(s) would be happy for this scenario?

There are many that could look at this potentially but it really does depend on what your aims and objectives are, along with your current circumstances as to which lenders may or may not be appropriate to you.

I would suggest discussing this with a whole of market mortgage adviser would be an idea.