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moving up the property ladder.
laurajane1
Posts: 58 Forumite
I need some advice
-Roughly 2 years ago i purchased my council flat it was valued at 110k, but i got 30k discount. I had 15k for a deposit, so got a mortgage for 65k on my own. As i was purchasing the property i meet my partner, i would love to buy a house with him and rent out my flat. My mortgage is £310 a month and know i could get between £600-650 rental each month. I now owe 58k on the mortgage but my partner only earns around 1K a month. Can we get a second morgage? Pleasse help, thanks
-Roughly 2 years ago i purchased my council flat it was valued at 110k, but i got 30k discount. I had 15k for a deposit, so got a mortgage for 65k on my own. As i was purchasing the property i meet my partner, i would love to buy a house with him and rent out my flat. My mortgage is £310 a month and know i could get between £600-650 rental each month. I now owe 58k on the mortgage but my partner only earns around 1K a month. Can we get a second morgage? Pleasse help, thanks
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Comments
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You need to check you will be granted consent to sublet by the council and consent to let by your current lender.
If they are granted, you will need a deposit of 15% to 20%, plus fees, as many lenders set their maximum loan lower when you are purchasing a second property.
You will be able to borrow upto 5x your joint gross annual incomes, after any credit commitments are deducted. The let property-mortgage in the background will be ignored if self-financing, but the rental income will not be taken into account in your new mortgage affordability calculations.
You'll need a clean credit history.I am a mortgage broker. You should note that this site doesn't check my status as a Mortgage Adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice. Please do not send PMs asking for one-to-one-advice, or representation.0 -
would i be able to get another mortgage using my earnings as i already got one from buying my flat, i'm confused.0
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You also need to check the paperwork you got from the council when you bought the flat under RTB ( right to buy?) as you got £30K discount.
Now I understand that if you sell within 5 years you may well have to pay back some of this discount? ( But you plan to rent !!)
If it was me I would overpay the mortgage every month for the next 3 years which builds up equity in the flat ( bigger deposit) and gives your partner chance to increase his/her income.
You would also have the chance to build up cash savings0 -
sounds like a good idea, but overpaying each month and saving will be hard.0
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This covered that question;-laurajane1 wrote: »would i be able to get another mortgage using my earnings as i already got one from buying my flat, i'm confused.You will be able to borrow upto 5x your joint gross annual incomes, after any credit commitments are deducted. The let property-mortgage in the background will be ignored if self-financing, but the rental income will not be taken into account in your new mortgage affordability calculations.
- Let property can be deemed self-financing and won't be deducted from your income
- You can borrow upto 5x joint gross annual incomes after credit commitments, ignoring the existing mortgage
- The rental income, as it is covering the existing mortgage, won't be part of your income to get you a bigger new mortgage.
Please seek professional advice. You need help to approach this the correct way.I am a mortgage broker. You should note that this site doesn't check my status as a Mortgage Adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice. Please do not send PMs asking for one-to-one-advice, or representation.0 -
so take the amount they will lend us and minus what i already owe on my mortgage?0
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No. You should find a lender which will ignore the let property and mortgage in the background.I am a mortgage broker. You should note that this site doesn't check my status as a Mortgage Adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice. Please do not send PMs asking for one-to-one-advice, or representation.0
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Nothing in life is easy !
As Kingstreet has already stated
1 You need to check you will be granted consent to sublet by the council and consent to let by your current lender.
2 find out about the RTB rules re letting /selling
3 overpay and save while you find out if you can sublet0 -
i will carry on overpaying at the moment to build up more equity, and try and save money if i can0
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