let to buy concerns

scootar

Hi, we need to move house but do not want to sell our current home (I may have to move back and we purchased first house in Oct 07 so likely loose a chunk of money) and would like to ideally buy a cheap second property. I am trying to figure out whether this makes financial sense... Our mortgage is fixed for 10 years and costs about 830 per month, the interest part of the payment is about 560 per month. The rental income would be min 650 and probably 700 per month. So, we'd have to contribute to the mortgage payments.... to the tune of about 150 a month... our mortgage provider is fine with this...

Any thoughts? I can give further details if you need it to advise us.

Cheers,

Scootar

Thrugelmir

Hanging onto your home because its lost value is no reason to keep it.

Why not overpay your current mortgage, pay less intesrest and reduce the capital owed,

scootar

Would others agree that let to buy is a bad option? Would we better over-paying the mortgage?

Cheers, Scootar

Cannon_Fodder

AFAIK, an offical Let-to-Buy product is supposed to pay for itself. In order to allow the transfer of your existing mortgage to the new place, and the creation of a LTB mortgage on the rental. If you are having to supplement the rent, this sounds like a non-starter.

(A figure of 125% rental income has popped into my head, but I may be confusing it with BTL.)

Having two residential mortgages is possible, if your income can support it. Get consent-to-let on the first (which your lender seems ok with), buy the second, cover both mortgages. Do-able, subject to your income, credit history, deposit for second mortgage, etc.

As Thrugelmir says, just because the property has fallen in value it does not have to be a reason not to sell. If you can port the product to a new place, you are aiming for cheaper anyway so may indirectly create some LTV for the Lender to be happy with.

Pumping £150 a month into a place (just to cover mortgage, plus how much for repairs and maintenance?) for what might be two or three years before some areas recover to previous prices...on top of managing the rental + learning about being a Landlord and their responsibilities...the risk of void periods, etc ?

Put it this way;

Landlords are trying to get their activities designated as a business, in order to avoid some of the tax increases/changes being talked about by the new Coalition Government. If they are truly a business, professional and responsible etc, it is fine for them to argue that point.

In which case, do the figures in your business plan stack up ?

If you had one, I don't think they do.

brit1234

scootar wrote: »

Would others agree that let to buy is a bad option? Would we better over-paying the mortgage?

Cheers, Scootar

Buy to let is a very bad idea at moment with falling prices, increased rent voids and new taxation.