Rent out current property and move to new one?

Internetferret

Hi there, we are looking to move house in the future but are unsure on whether to sell our current property or keep it and rent it out. We do have an appointment with our mortgage company Nationwide next week, but thought i'd ask on here in the meantime.

Current property valued at £135-138k
Current mortgage - £107k
Likely rental - £575-600 per month
current mortgage is interest only

Max we want to spend on a new house /house we would like to buy - £210k

Nationwide have already mentioned that we could port our current product over on the first £107k, then take up a new product for the remainder, but this of course is if we decide to sell.

My question is, do the above figures add up for if we want to rent out the existing property? Can we use the equity in the existing property as a deposit on the new if we decide to rent existing property?

Obviously we are aware that there are other associated costs to renting, plus the headache and hassle of being a landlord - all of this is a seperate issue and will be considered should we be in a position to financially. But for now - do the figures add up?
thanks in advance :-)

Dave_Ham

Potentially you could rent, although from the numbers provided you will need to find your deposit from elsewhere.

N'Wide will not let you raise further funds in advance of a consent to let and traditionally let to buy mortgages are capped at 75% loan to value - tops 80% and not even sure you will get one at this ltv...

Will not go into further detail on the other questions as I fear this will be a dealbreaker from the information provided.

kingstreet

Internetferret wrote: »

Can we use the equity in the existing property as a deposit on the new if we decide to rent existing property?

No. You can't.

If you had more equity, you could look to remortgage to release the capital you need for a deposit. However, your current loan to value at 79% is too high to remortgage to replace what you already owe.

Worth bearing in mind, if you do this by finding a deposit from elsewhere, Nationwide's maximum loan to value for the second property is 85%.

Internetferret

DaveHam and kingstreet- thankyou for your replies. I guess we will simply have to sell then! :money: