Renting help

tiger08

Hi

I am in the process of renting my house out at £400 per month the rental value of the property. I do not want to sell the property yet as we wouldnt get the money back fot it as of yet and would like to keep it for a few years at least. I have spoken to my mortgage company today and they are sending out the forms for the agreement to let the property. Our mortgage payments repayment and interest are £462 so i know i will have to pay the extra £62 a month which i am prepared to do and have the funds. Just something the mortage comapnied mentioned was the rent has to be 125% more then then payments and i am a bit confused do they mean on the interest amount? ther is no way we could charge more then £400 for our 1 bedroom house per month. Can anyone advice? I was also considering reducing it to interest only. Everything is moving so fast and now i am panicking a little bit.

Thank you

theartfullodger

Sorry to read your story.

Sounds like you'll be making a loss : that's without all the other expenses - insurance, repairs, gas safety certificate, accountant fees etc etc.

And that's assuming the rent comes in and interest rates don't go up.

Are you sure it wouldn't be better to sell - even if that means bankruptcy??

Hope it works out, best of luck.

G_M

You need to learn a lot more about the letting business before you start.

Budget to receive 10 month rent per year, not 12 - there will be gaps between tenants and tenants who don't pay.

Budget for an EPC, for a gas certificate, for marketing costs and/or agency fees, for landlords insurance, for TAX etc etc etc

Read this post and make sure you understand it.

It sounds like the mortgage lender is going to switch you to a BTL mortgage. This will cost more than your current residential mortgage. And yes, it is normal that they want 125% of the rental amount to cover the FULL mortgage payments (see my point above about 10 months rent!!!)

tiger08

Thanks we need to move as the property is too small as its one bedroom and we have a 2 year old. Yes will be making a loss in some ways but gaining by moving nearer to work therefore saving on petrol and a few other costs.
Wouldnt need to consider Bankruptcy as I have funds to cover this property plus rent another
When i spoke to the mortgage company they never mentioned switiching me to a different mortage or an increase in my pyament they said i would be able to rent short term and they will send me the forms out and there is an arrangement fee.
If i changed the mortage to interest only i would be able to cover 125%. I am not in this to make any money i just need to move to a bigger house nearer work and have more space whilst being able to keep my home for a few years before i sell it.