Remortgage or new Mortgage

divorcebeckoning

Would be grateful for some financial advice please.

Going through divorce and one of the financial options possibly open to me will be that I get one of my ex husband's houses solely in my name and with all the mortgage discharged.

That house is brand new and has had the same tenants in it for the past 2 years. Rental income of £600 pcm.

I would like to know if I can use the £600 pcm I would receive from that house to buy another small house. I am a mother so do not work. All the other income I receive (through maintenence, csa, child benefit) is the money I need to live on. The £600 however would be "excess" that I would very much like to use for paying off a mortgage.

Would mortgage lenders "touch me?"

Would it be a remortgage on that house and if so how much can I get for paying £600 a month (plus a deposit of circa £10 - 30K).

Any help much appreciated as I have no idea. Any brokers out there willing to offer help?

many thanks

divorcebeckoning

UK007BullDog

This is complicated. Yes, you can get a mortgage, but you might not be able to count on the full £600 as an income. You also have to think what happens if the tennants do not pay?

The number of kids you have will also work against you due to affordability. Are you going to get maintenance and will you have proof through the courts that your ex will have to pay you? That can be classed as an income.

You should see a broker but also ask self help groups like women who get divorced etc for there is much more than I would know that you need to consider.

Why not look at it differently? How much rent are you paying now and is the house big enough for you and your kids to live in? Would you save money by living in the house yourself?

MarkyMarkD

If the value of the let property is more than 120% of the value of the property you want to buy, and the rental income is more than the mortgage interest would be, then I think the better solution is as follows.

When you get the property, obtain a BTL mortgage against it for 85% of its value (the standard maximum, although you can get higher) - or whatever lesser amount you need to buy your new house.

Use this money to buy your new house for cash.

Then pay the mortgage on the let property.

The benefit of this is that the BTL mortgage can be assessed against the rental income, not against your income.

JoeK_3

As Mark says, consider remortgaging the house that is brand new and has had the same tenants in it for the past 2 years to 85% of the property value (subject to the assessed rental income) take the money that has been released and buy a house for you and the children.

This way you are not putting your domestic property at risk and will be able to claim tax relief on the buy to let property.

Do get whole of market advice from a mortgage broker.

JoeK