Want to buy another house, while renting current home.

david0001

Hello, some advice from mortgage brokers or knowledgeable people required please.
I want to buy another home but as we all know the market is poor for sellers. So I don't want to sell my property at the moment as I'm looking at about 30k - 40k loss.
My present house is mortgage free and I paid £305000 for it. I have a virgin one account with a facility of £180000 I can draw on. The house I want to buy and use for the next 5 years cost's £300000, I would rent my house and the idea is that the rent I'd get about £1000 per month would pay my £300000 mortgage ( £150k mortgage + £150k facility) I would take the £150k mortgage as interest only, with the intention of selling one or both properties in 5 years time.

My income including a pension, by the way, is £62k. I have no outstanding debts.
One of the drawbacks to this plan is the fact that I am 60 years old. There are probably other things I should also consider I shouldn't wonder. Anyway, would my plan be viable ? and entertained by mortgage lenders ? Advice appreciated.

chambta

Funnily enough I know someone in a similar position - the main difference being he intends selling what is his current property. He cannot do that though before needing to conclude his purchase. He's attempting to apply for an Offset mortgage on interest only without any ERC's on his current property. He may ultimately rent out his current residence but this will buy him time.

On the face on what you're saying I'm sure you'll be able to do what you need to.

G_M

At 60 you may struggle t find a mortgage, but a broker will be along soon.

Don't forget to factor in the costs of renting, and tax, when looking to use your rent to fund the mortgage. You may struggle to convince HMRC that your new mortgage is in any way related to your rental property, so you will not be able to offset the mortage against rental income for tax purposes.

You should also calculate to receive 10 months rent per year, not 12. That allows for voids between tenants, non-paying tenants etc. As well as agents fees, expenses etc. See here.

A quick check shows a £300,000 mortgage at, say, 5% (pessimistic) would cost you about £1773 per month (repayment) here.