Can i afford to buy second house?

jim5589

I am wondering if i would be able to buy a new house to live in but keep my current house to rent out. I own my current house our right. its a 2 bed terraced house worth about £150K. I could rent it for around £700 a month in this area currently. I am looking to buy a place worth about £180k if possible. I have a cash deposit of about £20K at the moment. One problem is i dont earn much at the moment as i work for myself in my own company i started and can only draw £600 a month wages. I have a lodger who pays me £350 a month who would move with me but i dont know how long i can bank on this lasting so probably best to not include this into the sums.

Has anyone here done this. Do you think looking at the about it is worth exploring at the moment or should i wait until i am earning more or have a larger deposit? Also how would it work if it is possible. would i be mortgaging my old house fully plus bit of the new house to make up the difference or would i be mortgaging the new house and using the old house as a guarantee?

catieeb06

Looking at it- the most you could potentially borrow would be 5x your annual income. This of course is all dependant upon how long your company has been established and whether you have any additional income such as working tax credits.

No lender will use the lodger income and as you've not been renting your current property out for 12 months there hasn't been a tax return filed including this information.

The only other alternative is to raise 75% LTV against your current property on a Let to Buy scenario, however this will leave you short on your onward purchase.

My advice is to build up your income on your company and look for properties when you're able to take more income out of the company.

Thrugelmir

You need to earning a larger wage than £600pm to achieve you aim.

armour

£20K/yr work related income is the minimum if you want a reasonable rate/fee on a buy to let (let to buy) mortgage.
That said you can get a btl mortgage which has no minimum income requirement, but it comes with a hefty fee.
Your problem then would be getting a residential mortgage based on a £600/month income.