Move or not to move?

H&H

Hi All,

Wonder if you could advise me and my OH.

We live in a small flat worth £130K with £15K mortgage left (if we stay put, this could be cleared by Dec 07). We are absolutely desperate for more space but would like to retain our flat as it is going to be our pension. We could let the flat out for £450/cm. Houses in our town sell for £250K. We're both in full time employment with a combined salary of £50K.

Do you think it is possible for us to take out another residential mortgage to raise enought money to buy a house?

Should we take out a BTL mortgage on the flat releasing equity plus a residential mortgage to buy a house?

Under the current housing climate should we just concentrate on paying the £15K off asap?



Any comments are welcome!

Thanks for listening and happy holidays!

Madiba_2

Borrowing £250k on £50k would be tricky without a deposit I think.

BTL mortgages are often more expensive too. You might be better off selling the flat and putting that money into your new house purchase.

Also, how old you?

H&H

You confirmed what I thought.. Banks normally lend only 3-4 times your salary, so the tops we could borrow would be £200K anyway. So we would need to release £50K equity from the flat. Thought about selling the flat, but rather not if we can help it. There is such a strong rental market round here, that we wouldn't have a problem letting it.

I'm 28, my OH is 36. No dependants as yet

herbiesjp

You can indeed do what you propose to do.

You can keep your current place and convert to BTL, whilst at the same time increasing your borrowing to have enough for a deposit on your new place.

The £450pcm rental income will dictate what the maximum amount you could borrow on the BTL will be.

You would then have a deposit and pick of the rates for your new purchase.

HTH