Letting Out House - Help!!!

cwoolhouse_2

Hi,

I've just been offered a new job which is not commutable from my current property. I can't afford to buy somewhere in London (even if I sold my current house), and so am thinking of renting out my home and renting an apartment in London with my partner as I want to stay on the property ladder.

The thing is, I have no idea what I'm doing! I know I need to get a gas and electrical safety certificate, and I believe I need to tell my mortgage company (however, I'm not sure I want to)

At present the property is worth about £110,000 with £77,000 mortgage and £13000 unsecured loan (Northern Rock Together mortgage). I'm paying £636 in total to Northern Rock and would get approximately £450-£500 rental income.

So, my questions are:

i) What do I need to do in terms of kicking off the rental process?

ii) Would I need to pay tax on the income, bearing in mind that it will be less than my mortgage payments?

iii) Will my lender require me to re-mortgage to a buy-to-let? (I'm tied in to the current deal until October 1st 2005)

Any help on this would be much appreciated!!

dougk_2

1) Speak to some local letting agents to get there details, valuations of rental income etc.
2) Speak to Northern Rock about the mortgage situation - you will need there permission to let the property.
3) The the tax on income can be offset against the interest element of the mortgage. Also it can be offset against various other things - Letting agents fees, Insurance, repairs etc.
4) You would find it hard to get a BTL mortgage to cover the property as the rental income is not that high considering the amount of mortgage you need. a rough guide is your rental income must cover 125% to 130% of the intrest element of the mortgage.
5) You will probably have to also change your insurance to a landlord policy as a standard policy won't cover it.
6) Buy a book on the subject of renting your property (or get one from the library). Renting your property for dummies is quite good!