Renting and new mortgage

benji23

I wanted to get some advice about renting and getting a new mortgage.

If I own a property outright, having paid off my mortgage and then want to let this, what happens if I then want to get a new mortgage to buy a bigger property.

Will a lender take into consideration the rent I will gain from the first property when arranging the size of mortgage I can have, or will it go purely on salary?


Thanks

holly_hobby

Hi

Nationwide BS will consider a portion of the monthly rental income (applicable only where the let property is unencumbered/mortgage free), in addition to your salary.

They of course require evidence of the rental income (which must have been in receipt for at least 1 month), and will accept bank statments plus a copy of the AST in support of this requirement.

Hope this helps

Holly

benji23

Thanks for the quick reply. Sorry, but what is an AST?

Thanks

m00m00

If you are thinking of renting and don't know what an AST (assured shorthold tenancy) is, you need to do a lot of research unto the rental business, for it is a business

benji23

I am only in the early stages of this idea and would do thorough research before entering into anything, but thanks for the confirmation.

m00m00

The house buying / renting forum on here would be an excellent place for you to ask any questions you have relating to the renting side of your plans

benji23

Thanks - I'll do that

holly_hobby

Easy straightforward answer .. AST is shortand for an "Assured Shorthold Tenancy" agreement.

It is basically a rental agreement between you and your tenant, which details the rental period, amount of rent due, when its due, conditions of tenancy, what the tenant is responsbile for, period of notice, and a whole host of other areas .... you can get one drawn up by a solicitor/letting agt for a fee - and I would not let without one.

As a first time landlord, please do lots of research on the matter (demand, achieveable rents etc), and I would recommend having a letting agt initially manage the tenancy for you until you get to know the ropes a bit more.

You will need contintency funds for property maintenance and repairs, agt fees (if employed), and times when you may have no tenant in place (as your residential mge is to be based on part of your stated rental income).

Tax returns, rental income (less allowable deductions ) is taxable by your annual self assessment (unless your rent is v low (£2,500 pa or less) and your are a PAYE employee, you can apply for HMRC to amend your tax code to deduct due tax at source).

Do wisely consider the situation and all the negatives as well as the positives - if a BTL goes well it can be a great, but all too often it goes horribly wrong and the owner often comes to regret their decision, it is a commercial venture after all.

Hope this helps and I wish you well ...

Holly

benji23

Hi Holly

Thanks for all your advice. It is something I will look at in detail and approach with caution as I have heard a few horror stories!

Thanks again