Help required buying house/keeping or selling flat.

Telthebeest

We have another arrival on the way which means we need to buy house. I have done a bit of research so have a bit of an idea but after reading all the experts on here there is only one way to go. Over to you people........
Here are a few basic facts
1. I own a 2 bed flat £133k left on mortgage, estate agents valued £200-£210k prob sale value of £185-£195. The mortgage is currently on intrest only tracker paying £108 per month.
2. The lease is 63 years but I have committed to a 99yr extension which should cost around 14k to be paid in approx next 9 months. I was old I could put this on mortgage without it being means tested as it protects the asset value.
3. Have aggreemnet in principle form Local Authority to rent flat for £800 per month for a 3 year period. They manage property in that 3 years.
4. Our joint income is £70k pa.
5. Savings of £40k for deposit & fees, maybe able to get another £10k.
6. Have no debt, ie credit cards or loans.
7. House prices we are looking at is £250k-300k

Will we get a large enough mortgage to buy the house without selling the flat?
I think if we were able to keep the flat & rent it I have budgeted (after paying the mortgage on flat & keeping a reserve for Tax & repairs after the 3 year lease) to have a £200 per month suplus to pay towards mortgage on house.

Help me

Telthebeest

help me people

Werdnal

Telthebeest wrote: »

help me people

Firstly I would advise you to calm down a little. If you are thinking of becoming a LL and you get so easily stressed because no-one has replied to your initial post, you are never going to stand the worry and turmoil that letting can bring!

You have a leasehold flat, and it is mortgaged so first you need to do 2 things before you can even think about letting:

Does the lease allow you to let it? You would need to check, and if not, the freeholder would need to give permission. They will sometimes charge for this, they sometimes refuse.

Have you spoken to your mortgage lender about consent to let? Again, they need to give permission, they sometimes add extra costs, annual admin fees, set-up fees, add additional % to your payments and can even specify who you let to, how much rent you must charge and how long you can let it for. Of course, this will all be academic if they refuse, or insist you transfer to a specific Buy to Let loan, which might cost you a lot more!

Then you need to read this:

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

There is a lot more to letting than you probably realise - you must conform to all the legal requirements, you must declare you income for tax, you must ensure you are up to speed with all the tenancy and housing laws, health and safety requirements and how you can legally end a tenancy or evict tenants without falling foul of illegal eviction penalties.

Once you have read the linked post, and all the links it contains, if you still feel letting is for you, and have further questions, come back and ask again.

In the meantime CHILL - people are not always sitting here waiting for new posts to pop up, and you would get some replies eventually.

Telthebeest

Thank you for your help, I shall read and come back for more advice if needed

ognum

Honestly I don't think £200 per month is great after tax etc if you are a landlord.

issues come up that need to be sorted, new boiler, repairs to appliances, this month I have just had some sliding door problems repair cost £65, not a lot of money but it all adds up.

Are you having a letting agent, if so that's 10% of your rental gone, if you are managing yourself be prepared for taking calls at any time of the day and night.

I would want more than £200 profit each month to make me consider a flat especially as you paying an IO mortgage so you are making no repayment on the principle.

It's a non starter for me!

Telthebeest

I wont be managing the property, the local authority are. Once they accept the property they have to deal with these issues over the 3 year period

Werdnal

Telthebeest wrote: »

I wont be managing the property, the local authority are. Once they accept the property they have to deal with these issues over the 3 year period

Do you mean you are handing it over on a 3 year lease for the local authority to let it? I have read many horror stories about this type of deal - they have numerous tenants over the 3 year lease, who use and abuse the place, then hand it back for the LL to put right, with little or no recourse to claim back money for the damage! I would think very seriously about this, and get a copy of the lease before you sign anything, to make sure you know what you are getting into.

You say that would need to deal with repairs etc, but they will only do the bear minimum of maintenance to ensure the property is habitable - they won't worry about the decor, fixtures and fittings etc, so long as things work, they don't have to look pretty!

Your mortgage lender and freeholder may have similar concerns about this type of let, and this could have a serious impact on whether either or both with consent to it.

Telthebeest

I have looked into the agreement by the local authority and they basically have to give it back to you in the same condition as they received it.

I more interested as to would I be able to raise the finance for the buy to let & the house purchase

Yorkie1

Telthebeest wrote: »

I have looked into the agreement by the local authority and they basically have to give it back to you in the same condition as they received it.

I more interested as to would I be able to raise the finance for the buy to let & the house purchase

I can't help with your finance query, but regarding the bit I've highlighted, all the Council contracts say that but there are quite a lot of threads on here where that has not happened despite the contract. You need to be prepared (financially and emotionally) to get the place back in a right mess.

jackomdj

You may be ok, talk to a mortgage advisor. When we moved we took out a BTL mortgage on our old property and transferee our current mortgage over to the new house (added to it), it meant we were not in a chain, rental property is not making us a fortune but long term we think it will increase in value.

The BTL was in the right multiples so it was viewed on it's own merits and did not effect our other mortgage or income.