Second property

dangerman7uk

I own and live in a small two bedroom terrace in Liverpool, but my wife is now pregnant with out third baby. Inevitably I am thinking about moving, but I was wondering if someone could offer me some advice on my best course of action.

I really like the idea of buying another property that will be cheap, but with a garden, driveway/garage and an extra bedroom or two. I've spotted several houses within (what I think is) my price range.

Should I, in your opinion, rent my current house out for the valued £450 (my mortgage is £350) and take out a second mortgage to buy the new property? If so, could any landlord experienced people advice me whether the £100 difference is enough to cover my landlord costs (insurance, boiler cover etc)?

Or should I be patient and sit on my current house until it sells? The problem with this is that my owed mortgage is £58000, and even though it's valued at £75000 I can't see anything similar selling for more than £60000. So I think that if I sell, I'll be lucky to break even. Which is not appealing to me.

I like the idea of keeping it and buying another. In another 20 years, providing I have consistent tenants, the mortgage will be paid and my family will have a nice little nest egg.

Werdnal

First things first - have you asked your mortgage lender for permission to let? Your mortgage now is probably on residential terms, and if lender consents to you letting (some do with extra costs and clauses, some don't), your monthly payments may increase, so this could all be a hypothetical question!

neverdespairgirl

Do you have a deposit and moving costs saved up?

G_M

dangerman7uk wrote: »

....
Should I, in your opinion, rent my current house out for the valued £450 (my mortgage is £350) and take out a second mortgage to buy the new property? If so, could any landlord experienced people advice me whether the £100 difference is enough to cover my landlord costs (insurance, boiler cover etc)?

.

Well that's a good start but you need
a) to do a full budget - mortgage cost after CTL/BTL + all other costs....
b) a capital reserve - just in case your 1st tenant defaults and you still have to pay the mortgage....

Here

dangerman7uk

Werdnal wrote: »

First things first - have you asked your mortgage lender for permission to let? Your mortgage now is probably on residential terms, and if lender consents to you letting (some do with extra costs and clauses, some don't), your monthly payments may increase, so this could all be a hypothetical question!

Yep, they already agreed to let me rent last year. I couldn't rent it in the one month window that I'd planned, so I called to say that we're moving back in. I got the impression that they wouldn't have a problem switching it back again for me. The mortgage went up by about £5 per month and wasn't reduced when I moved back in.

I'm with Santander, by the way.

dangerman7uk

neverdespairgirl wrote: »

Do you have a deposit and moving costs saved up?

Well the deposit will be so small that I'll be able to find it. Moving costs should be small too. The house I have my eye on at the moment is 28k, so if I borrow 5k - 10k off my old man then that's a significant deposit. Solicitor fees I can swing myself I think. It cost me £400 last time.

What moving/other costs do you have in mind? I'm wondering if I've forgotten something.

dangerman7uk

G_M wrote: »

Well that's a good start but you need
a) to do a full budget - mortgage cost after CTL/BTL + all other costs....
b) a capital reserve - just in case your 1st tenant defaults and you still have to pay the mortgage....

Here

Consent to Let won't be a problem. I'm already paying the CTL rate which is about £350, I think it's just a phone call to sort it out. The new mortgage, I believe, may qualify for a first time buyer, but I'll need to check with a broker. I was hoping there might be some kind of landlord insurance I could take out to protect me against defaulting tenants and potential damages. But that's what I need to find out from savvy characters like yourself. I'm not sure what's available and what the costs are.

My capital reserve will need to be my own wages and credit. It's not a good way to do things, I'm aware. But it's all I have and I don't see many other options. That said, I've heard that in times of financial dispair, mortgage providers will allow you to switch to interest only, or even give you a 'holiday' period where you don't need to pay your mortgage for a year (interest is added on to the total mortgage).

G_M

dangerman7uk wrote: »

..... I was hoping there might be some kind of landlord insurance I could take out to protect me against defaulting tenants and potential damages. But that's what I need to find out from savvy characters like yourself. I'm not sure what's available an what the costds are.

).

which is why I recommended you do a full budget! Open a spreadsheet and work out ALL the costs. The process of doing this is important, as well as the final figure you arrive at.

yes there are policies for this, but again, they cost so need to go in your budget!

Use the link I provided. Do some research. Learn what's involved and what it costs!

The wrong way to do this is to ask isolated questions and get individual answers. You have to understand the big picture.

dangerman7uk

G_M wrote: »

which is why I recommended you do a full budget!

Use the link I provided. Do some research. Learn what's involved and what it costs!

The wrong way to do this is to ask isolated questions and get individual answers. You have to understand the big picture.

That's good advice, I appreciate it. I'll do exactly that. I suppose I was hoping to just have it summed up for me. Like what's the average landlord expenses and what does the average landlord have to pay for.

I'll get reading...