Let to buy dilemma

coolmax

Hi All

I'm thinking of keeping and renting my property and buying another, would be grateful for advice; here's the low down ...

1) Owe 35K on current property - on a lifetime tracker at 1.64 over BofE base rate

2) I am 40 and this will be paid off 16 years

3) Bought house for £110k, spent £5K on renovations (2005)

4) Have consulted 3 mortgage brokers who all said pretty much the same - London and County gave me the following info;

Buy to let @ 3.99% - £275 (interest only)
Borrowing 82.5k over 20 years
Fees @ £412
Valuation @ £365
Legal @ £299
Cashback @ £500

Onward Purchase - £91K over 20 years (repayment) @ £497 (2.84%)
Fees £99
Valuation £163

5) Rental valuation for current property is £500 - £525, and I believe the rental market in my town is pretty good.

I'm on my own, and I don't have much of a pension, having only started to pay in to mine in 2011. I do also have a couple of small pensions from years ago, and I'm seeing an IFA next week, to get clearer idea of my current pension provision. The whole idea of this is about having a better pension pot for the future.

The trouble is, although I'm fairly good at gathering info, I'm not so good at processing it. I'm not very good with money (hence, late starting pension), but I'm debt free (except for mortgage) and keen to start making better plans for my future.

Any advice re whether this is a good idea - or other options - most gratefully received.

Thanks - Coolmax :A

kingstreet

If you remortgage the current property to another lender, ask the current lender if it will allow you a new mortgage on the new property to which you could port that nice rate, on the first £35k.

Werdnal

Are you also aware of all the legal requirements, costs and tax liability when letting a property.

If you haven't already read it, check this out:

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

coolmax

Thanks both.

I know my mortgage is portable Kingstreet, (well, the outstanding amount is). But, they don't do Buy to Let (Nationwide).

I have done lots reading about rules/regs etc, but I haven't seen some of these online resources - thanks Werdnal, I love a good read! ;-)

I guess what I really want to know is, does it make financial sense to do this? I know that's a rather broad question, but that's the issue I can't get my head around ... What do I benefit from this, over and above just selling up? I think I could cope with tenants, but only if it's financially worthwhile.

kingstreet

Yes.

You would remortgage to a new lender onto a buy to let basis, but the substantive issue with Nationwide is would they allow you to port the rate where the old mortgage is being replaced by a new one by remortgaging, not on the sale of the property?

IIRC Nationwide will only port where the current mortgage is being repaid on a simultaneous sale and a new one being effected on the purchase of a new property.

Check with them, to ensure you are not working under false pretences.

coolmax

kingstreet wrote: »

Yes.

You would remortgage to a new lender onto a buy to let basis, but the substantive issue with Nationwide is would they allow you to port the rate where the old mortgage is being replaced by a new one by remortgaging, not on the sale of the property?

IIRC Nationwide will only port where the current mortgage is being repaid on a simultaneous sale and a new one being effected on the purchase of a new property.

Check with them, to ensure you are not working under false pretences.

See, now you've lost me ... sorry ....

kingstreet

A mortgage rate is normally portable where you simultaneously sell one house and buy another, where the mortgages are with the same lender.

Some lenders will only allow a port in those circumstances.

You are thinking of asking Nationwide to port where you are remortgaging, not selling, and I suspect they will not allow that.

coolmax

Sorry ... yes ... I've already asked them and they will not.

kingstreet

Ok. So, it's a question of remortgaging the current property onto a BTL to repay Nationwide, then a new mortgage on the new property, which could also be with Nationwide, but not on the old rate.

The mortgage amounts mentioned aren't particularly large, so concentrating on low-fee products is a good idea. TBH though, this is probably going to be more about the philosophical/legal/moral issues surrounding letting as Werdnal intimated earlier, rather than pounds, shillings and pence.

Do you actually want to be a landlord, with all that entails?

Anyone can mess about with numbers and perhaps save half a percent here and there, but if the answer to the above is no, it's all a bit pointless...

coolmax

To be perfectly honest, I guess I don't. But I thought it might be a good idea for my future.