mortgage advice needed

annitahamnett

I am 50 years old, i own an ex council flat outright valued at 50.000 which my daughter rents at £350 per month, i have a house with £25.000 left on the mortgage which is valued at £150,000 which I can let to an interested party for £550 per month and £20.000 in savings, and no loans or debts to speak of, i am looking for a self certification mortgage to purchase a property for myself and let my exsisting house can anyone give me advice on my best course of action?

MarkyMarkD

I am 50 years old, i own an ex council flat outright valued at 50.000 which my daughter rents at £350 per month

so far so good ... rental yield 8.4% ... so this isn't a bad deal.

I have a house with £25.000 left on the mortgage which is valued at £150,000 which I can let to an interested party for £550 per month

not sure why you would want to do this. Rental yield = 4.4%, which is far less than a mortgage on this property would cost, and far less than you can get in savings interest.

and £20.000 in savings, and no loans or debts to speak of, i am looking for a self certification mortgage to purchase a  property  for myself and let my exsisting house can anyone give me advice on my best course of action?

Well, as I've said above, I'm not sure of the merits of keeping your current property and letting it if you can only earn 4.4% yield BEFORE costs.

Because of the way you are financing it (mainly from equity, and only £25k from borrowings) most of your rental income will be taxed, as well, making the post-tax return even less attractive. Basically, you are incurring costs (maintenance, lost interest) in exchange for a hope of capital gains. Is that really a sensible thing to do?

If you did go ahead with this proposal, I'm not sure why you want a self-cert mortgage either. You will have rental income of £900 a month - not a bad amount. Is that not enough income, along with your other income, to get a normal mortgage?

I think you should think hard about why you want to let out the current property (at such a low rental yield), rather than sell it and buy one you want to live in. And if you decide you still want to do it the way you suggested, I would speak to a mortgage broker - even one of my esteemed colleagues on this board who can give you specific advice offline.