Considering buy-to-let...

HokkaHokkaTei

Hello,
Here's a quick rundown of our circumstances
We currently have a property that we have outgrown as a family- it's two bedroom and worth around £185k We are living at my Mum's at the moment though this is a short term solution (18 months at most)
We currently rent it out for £690 after agents fees though our mortgage is currently around £900 (fixed rate) We have £155000 left to pay on our mortgage which is for a further 26 or 27 years (not sure which)
Our mortgage is due for renewal in a couple of months so we are thinking of going on a tracker for the short term.
I am currently the sole earner on £24k before overtime.
We have approx 88k in savings though...
We will need to buy a 3 bed place which in our chosen area is likely to set us back between 225k-£245k though £225k is the figure we will be aiming at (or lower if possible)
If we go for the buy to let route, we would probably need to plow some of our savings into a mortgage so that it is more manageable.
I want to look at our options basically...
Am interested in retaining our property as a buy-to-let but not sure if this is possible giving our circumstances...if anyone can give any feedback or suggestions I would greatly appreciate it.
The other option would be to sell our property and use the proceeds to finance our move into a larger property.
When we do get our new property, I would like the mortgage payments to be around £800 a month or under is possible...
So much to take on board, can anyone help please!!!
Thanks in advance
Chris

VIGILANT22

Have you rcvd permission to let from yr lender...are you declaring unearned income of £690 after agents fees

happybroker

HokkaHokkaTei wrote: »

Hello,
Here's a quick rundown of our circumstances
We currently have a property that we have outgrown as a family- it's two bedroom and worth around £185k We are living at my Mum's at the moment though this is a short term solution (18 months at most)
We currently rent it out for £690 after agents fees though our mortgage is currently around £900 (fixed rate) We have £155000 left to pay on our mortgage which is for a further 26 or 27 years (not sure which)
Our mortgage is due for renewal in a couple of months so we are thinking of going on a tracker for the short term.
I am currently the sole earner on £24k before overtime.
We have approx 88k in savings though...
We will need to buy a 3 bed place which in our chosen area is likely to set us back between 225k-£245k though £225k is the figure we will be aiming at (or lower if possible)
If we go for the buy to let route, we would probably need to plow some of our savings into a mortgage so that it is more manageable.
I want to look at our options basically...
Am interested in retaining our property as a buy-to-let but not sure if this is possible giving our circumstances...if anyone can give any feedback or suggestions I would greatly appreciate it.
The other option would be to sell our property and use the proceeds to finance our move into a larger property.
When we do get our new property, I would like the mortgage payments to be around £800 a month or under is possible...
So much to take on board, can anyone help please!!!
Thanks in advance
Chris

Obviously this isn't going to be straight forward (don't suppose you would be posting if it was!!) as the current mortgage will have an impact on the affordability calculations for the new mortgage due to the fact the rent received is less than the monthly mortgage commitment.

The fact you have a good amount of savings is key and the best way to raise the cash for another purchase could be one of a number of routes. Speak to friends and family and try and get a recommendation to a good broker.

This sort of thing isn't really for this type of forum IMHO, the thread will just end up full of people falling out with each other over permission to let/ declaration of income to hmrc and the rest. Obviously these things are important but weren't part of your query.

VIGILANT22

[QUOTE=happybroker._Obviously_these things are important but weren't part of your query.[/QUOTE]

However they would be going forward.........

Theogirl_2

Being a landlord is lots of hassle, and only worth it for the right return. You would be loosing money here I think. What did you buy the house for? Even at 160K the yield is 4.2 % ish what about repairs and voids and insurances etc. ?

herbiesjp

Agree with Happy.

There are so many permutations to this scenario, that you are not going to get clear cut answers.

Your best bet would be to get professional advice, and let them guide you through the various options.

In theory what you want to do is plausible, but it will depend on the detail as to whether it will be possible in reality.

Theogirl_2

With 24k income do you have enough slack in the system to cover everything?

On your residential the bank would prob only offer 4x salary at most. and on the BTL your rent should be 125% of the interest payment. I just don't see how you can afford both with only 100k of additional borrowing. I think that you'll have to sell your house to move.

Theogirl_2

I'm stunned that the Mortgage people on here are saying it is even something to consider.

You would need to get the borrowing on your house down to 140k to get to 75% LTV and at 4% (a very generous rate) the repayments interest only would be £470 a month so your rent would cover this. But you have other costs to consider.

You would then be looking to borrow 225-73 =155k for your house, on 24k the numbers just don't stack up. Such a high risk on the property market too.

It is lending like this that is risky.

happybroker

Theogirl wrote: »

I'm stunned that the Mortgage people on here are saying it is even something to consider.

You would need to get the borrowing on your house down to 140k to get to 75% LTV and at 4% (a very generous rate) the repayments interest only would be £470 a month so your rent would cover this. But you have other costs to consider.

You would then be looking to borrow 225-73 =155k for your house, on 24k the numbers just don't stack up. Such a high risk on the property market too.

It is lending like this that is risky.

There is so little info that it's difficult to say if it's risky or not. Overtime is there on top of the basic (I have a client who earns 45% of his gross income in overtime and has done for nearly 20 years) and OP has £88k in savings which has to have come from some where.

My suggestion is to speak to a well informed professional and crunch the numbers....it may work it may not.

herbiesjp

And your posts detract from the questions raised by the OP.

Hence why so many people ask you not to reply, or just ignore you.

Lets look at the average post count shall we, and see who is desperate to post? And that's just your V22 ID, not looking at the others you have!

As for the rest of your last response - I'll treat it with how it should be - ignored!!!!

Once again, I'll leave you to enjoy the forum - be careful now and don't find too many trolls!

Theogirl_2

herbiesjp wrote: »

I have stated that in theory it is possible - ie a LTB scenario

I have then stated that in reality it would depend on the figures, and to get advice to see if it is possible.

Seeing as I know nothing about the OP, and neither do you.

To make an informed decision, you can only do that once you have looked at all the information.

I don't want to get into a spat on here. But even if this is doable, do you think it's a good idea? So much of your financial future linked to the property market? Perhaps I'll never be rich as it just feels too risky to me.