Can anyone calculate if this is viable??

superskintmouse

Hi I am after some buy to let advice, I own my own home with my husband value is approx £190000, mortgage is £60,000. I have found a house i would like to move to which is £259950 but i dont want to sell the one im in. Is it possible to rent this one out and live in the new one?? Only my husband works as im a stay at home mum. what income would he need?

Thrugelmir

How much deposit do you available to put down on the new property? As this will determine the interest rate options available to you.

superskintmouse

Thanks for replying Thrugelmir, I guess I would have to remortgage the house I live in now to raise the deposit? I dont have any savings I can use for the deposi.

Thrugelmir

Any money saved for fees or the stamp duty?

superskintmouse

I have about £12k, is that enough?

kingstreet

Right. Another accidental landlord case. These are getting very, very regular.

You need to remortgage the current property onto a formal buy to let product. This normally involves the rental income having to exceed the monthly mortgage interest (at 6%) by 25%.

So, you need to know what the property will attract in rent, before you can establish a borrowing figure.

For example, if the property rental value is £700pcm, this equates to a mortgage of £112,000 (112k x 6% / 12 x 125%). Using this example, you'd repay the current mortgage, £60k leaving you with £52k to put towards the next property purchase and fees.

You would be paying £250k for the new property. No-one in their right mind sells or buys for just over £250k due to the higher SD payment of 3%. So, if you buy for £250k, you'll need a mortgage of around £200k. Assuming a lender will lend 4x income, your husband would need to earn £50k pa, after credit commitments are deducted and before dependants costs are taken into account. That's you and the kids by the way.

The £12k you've got in cash will cover the selling, remortgaging and buying costs, perhaps leaving a grand or two left over...

Last for now, you'll need a lender which will ignore the let property and mortgage in the background. Some will tax you the mortgage payment like a credit commitment, so your husband would need to earn even more to cover that.

The question you really need to ask yourselves, is do you really want the hassle and the legal responsibilities of being a landlord? Could you afford to pay two mortgages if there's no tenant for a while?

Thrugelmir

My honest opinion is to consider selling. Lenders will expect you to at least fund the deposit on the new property not borrow from existing equity.

Injecting the equity you have will enable you to obtain a better rate of interest. Something to consider.

Letting property is not a guaranteed return. Many pitfalls and risks.

superskintmouse

ok thanks very much for your advice