Can't sell house. What are the options?

sebdangerfield

Hi, I'm looking for some advice on my situation. I purchased my flat almost three years ago. I bought it whilst I was single and the Mortgage is in my name only. The flat was perfect for my needs but my girlfriend has been living with me for a while now and we'd really like to move into another house that's more suitable.

I bought the flat for £112,000 and have £85,000 remaining on the mortgage along with an interest free loan from the builder for another £20,000 which doesn't need to be paid back for another 8 years, this was just an incentive available at the time. Similar flats are currently selling for between £100,000 and £105,000. This obviously means I'm very close to, if not in negative equity meaning I've nothing in this house to use as a deposit for the new house.

I'm thinking about renting my flat out and trying to get another mortgage with my girlfriend. I'd be able to rent my flat for £500-£550 pcm and the current mortgage is £330 per month. We have a joint income of £56,000.

My question is; would we be able to keep on my mortgage to rent out this flat whilst getting a joint mortgage to by another house for us to live in? Any help appreciated.

GMS

You would need to get 'Consent to Let' from your current lender to allow you to rent it out. If they will not grant this you are stuck as you would not get a Buy to Let mortgage with those figures.

Do you have a deposit for a new mortgage? You would need minimum 10%.

Assuming you could rent your flat the mortgage on it would be considered self financing from rent and would be ignored for affordability purposes with most lenders.

Quite a risky strategy though as if consent to let is granted it may only be for 12 months after which ime you could find yourself with 2 mortgages and a flat you cannot sell.

Think carefully before proceeding.

sebdangerfield

Thanks for such quick advice. I do have savings for the deposit, I'd look to purchase the new house at a price well within our affordability just in case there was ever a problem with rent or mortgage rate rises.

just to confirm, are you saying that because the mortgage on the flat is self funding i.e it's being paid for by the rent then the new mortgage would be calculated on our income just as if we didn't have the original mortgage?

GMS

Some lenders will disregard the mortgage as the rental pays it. Usually they require the rent to be 125% of the mortgage payment, which yours exceeds on your figures.

You will need the consent to let though before you can do anything.

sebdangerfield

Thanks very much, I really appreciate you help.