Buying new house whilst renting out current home

lee_d_m

Hi,

We are looking to purchase a new house for our ever expanding family, but we can't sell our current apartment as we are in negative equity.

Therefore, we are planning on renting our apartment which will cover the existing mortgage repayments and then purchase a new house.

After talking to some friends, they have warned me that some mortgage firms will deduct my current mortgage from the amount they will lend to me, unless they see evidence of rental income.

As I can't rent out my flat until I have moved, can someone advise which banks/building societies will lend without this criteria.

I've heard good things about The Mortgage Works, does anyone know if these are likely to do this or can recommend anyone else ?

Thanks

Wh05apk

Most lenders will accept an "anticipated" rental income figure, and provided it covers the mortgage interest (usually by 125%) then they will ignore it.

Two potential issues are that, your current lender may not give you "consent to rent" if you are in negative equity, and where is the deposit coming from for your new purchase?

lee_d_m

Hi,

Thanks for your reply.

My existing lender has already said that they will provide me consent to let.

My deposit will be provided as a gift from a close relative. This will give us an LTV of approx. 67% on the houses in our price range.

Also, my credit score is 999.

Do you know of any lenders specifically that you know will accept an anticipated rental figure ?

Thanks

JimmyTheWig

You're probably best speaking to a broker (fees free and, ideally, whole of market) to see what they suggest.

Wh05apk

Is the deposit a "gift" or will it need to be repaid, if it's repayable lenders do not like that.

lee_d_m

Hi

It's a gift, definitely will not need to be repaid (luckily for me ). the relative is willing to write a letter to that effect if necessary.

Thanks.

Wh05apk

You should be fine then, as suggested I would recommend finding a good broker, as depending on your income, not all lenders will be an option.

louisa_

We were in a similar position a couple of years ago and Abbey needed an official letter from an accredited estate agent for the "anticipated rental income figure" - they weren't happy with a letter from the property agent down the road, it had to be one of the big firms (we went with William H Brown).