Is it possible?

Lokwra

I am desperate to move house but can't seem to find a way to raise the necessary funds. My house that I currently live in has a mortgage of £40,000. It has been recently been valued at £125,000. The house I would like to buy is £175,000. I have been self employed for the past 2 years and therefore would need to self certify. Last years net income was £13,350. My partner is a teacher earning £21,290. The mortgage on my current house is in my name only.
In an ideal world we would like to keep the existing house to let and release the available equity for a deposit on the new house. I realise that this is a tall order, can anybody help?

silvercar

So you've got £85k equity in your current home. Selling that and putting the equity into your new home will mean getting a mortgage of £90k. With a joint income of £34,640 you are looking for less than 2.6 times your joint income. That should be do-able, how much paperwork you have on your self-employment willl dictate whether you need to self certify or not.

If you wanted to let your current home out you would normally only get an 85% mortgage (loan to value) and that would depend on the rental figures stacking up. 85% on £125k is £106k. So you would be looking to increase your mortgage from £40k to £106k ie 66k. So on a £175k property you would put down this £66k as a deposit and need a mortgage of £109k. £109k is just over 3 times joint salary, still possible depending on that rental income you would expect on the house.

First check that you have enough savings to cope with moving costs and empty properties. Then find out what the likely rental would be on your house. Normally your rent need to cover the mortgage payments by at least 1.25.

herbiesjp

What kind of rental income can you expect on your property?

Lokwra

Thanks for the info guys.
I do not have an accountant and therefore paperwork is very limited. My current mortgage payments are £310. The rental income is expected at £500.
Would it also be possible to get the mortgage in my partners name using her income only, whilst using the available equity in my current house to use as a deposit?