Want to move house but keep flat to rent out

clickhappy

Hi,

I am a first time poster but have found the website a great resource and interesting read for quite a while.

My partner and I are currently living in a flat and am looking to move to a house in a couple of years but we would like to keep the flat to rent out. We own just over 40% of the flat so far so will be looking to release some equity to get a deposit for our next home.

I have looked at rental incomes in the area (some in the same development) and they are around 6% of property value with a strong rental market.

Would I require a buy to let mortgage for the flat and then a standard mortgage for the new place?

I have recently found out that my private pension (many many years away) will be pretty poor and I am hoping that the flat could be my nest egg.

Thanks in advance,


Tom

Notmyrealname

No. You require a Let To Buy which allows you to release equity in a property you want to rent out to buy another house.

Only downside is they tend to be 25-35% LTV and they require a rental valuation of 125%-130% of the monthly mortgage interest payment.

So the most you are likely to be able to release from your flat is around 5-15% of the valuation.

Werdnal

You would need to convert to a BTL loan, or atleast get consent to let on your existing mortgage - some lenders agree, some add extra costs and clauses, others refuse!

Is the flat Leasehold? If so, do you know if you are actually allowed to let it? Some leases specify owner occupier only, so you may also need to get consent from the freeholder, and pay associated costs here too.

Do you have any idea about the costs, legal obligations and other regulations surrounding letting?

There is a very good post here:

http://forums.moneysavingexpert.com/showpost.php?p=41160642&postcount=12

which costs a lot that a newbie LL needs to know.

You also need to declare your rental income for tax.

Read the link and all the links it contains, then if you have any further questions, please come back and ask again.

clickhappy

Thanks for the quick replies.

The flat is leasehold but I am allowed to let.

I knew there were going to be costs involved but I've obviously got much more research to do.