Am I nuts or thinking logically for the future??

achiddas

Do I need my head read or is this logical?? Anybody may reply and i wont be offended if you call me allsorts??

We currently own a 2 bedroom house worth 140k with an outstanding mortgage of 120k. We have tried selling but nothing is shifting, we are outgrowing fast as we have 2 kiddies and more toys than you could ever imagine. The rate for this mortgage has just reverted to 0.99% above base.

A 3 bedroom house has just come on the market, just around the corner from my parents, for 149K, yes it needs work but is liveable immediately. We have 18k put aside for the move when ours sold but am wondering if its prudent ( or nuts) to use this to buy said house for about 145k and rent our 2 bedroom and keep as investment/pension as neither of us has anyhthing in place at present. Its the thought of borrowing another 120kish that spooks me a bit.

I'm 28, missus 30.I earn 30k plus overtime and the missus earns 25k, santander say our only change would be a £95 setup fee to let our current property, we currently save over £1000 a month so we have some breathing space if problems arise. Also are there lenders out there willing to lend more money to those with outstanding mortgages on other properties??

Any advice gratefully received!!

Werdnal

Renting is a hit and miss business, and relying on rent to cover the mortgage can very quickly go pear shaped if tenants stop paying, or you have any voids in the let.

I would advise you to speak to an independent fiancial advisor, and give all your information, income details etc, to see what they say for your individual circumstances.

Plus, as you may be aware there are legal obligations and responsibilities of becoming a LL, and you must research these thoroughly to make sure you get it right.

kingstreet

It is feasible. Talk to a whole of market or independent broker for advice. Prepare for times you won't have a tenant and two mortgages to pay and get familiar quickly with the legal requirements and taxation implications of being a landlord.

Don't forget only mortgage interest payments (not the capital bit) can be offset against the rental income for tax purposes, you'll have to change your buildings insurance and the rent will have to exceed the mortgage payments by 25% at least.

The_Palmist

You must stay where you are, use any extra income to clear of as much of the mortgage as possible. Do not think about getting a new loan till you have paid off at least half of your current mortgage. You are on a great rate, make the most of it.

Get an extension conservatory or something if you need more space.

The_Palmist

You have already outgrown a 2 bedroom house [you think], soon the kids will grow up and will need even more space, how long do you think before you will require 3+ bedrooms. My advice would be to stay where you are for now and buy a grand 4bedroom later. There will always be new houses on the market.

brit1234

You are best extending where you are or selling you house. To rent out your existing home and buy another one will wipe out your equity in both with the price falls. Your far more likely to have high remortgage costs than a new pension source.