let to buy advice please

fivesmaster

I see there is another thread similar ot this and the advice is to go see an IFA which i am doing next week but am interested in view's of others, particularly anyone who has done this.

our current residential property we would like to let out, value is £140,000 will rent for £700 per month
We would be buying another property value £218,000.

Financially, I think it makes sense but my worry is the mortgages so here we go:

mortgage required on £218 property would be £70,000, on the let to buy it would be £103,000. My income is £33,000 per year with 3 dependants.

any ideas on if this is workable? any others with similar experience/situation?

Any out there who would just sell and therefore just have the one residential property with a smallish mortgage at about £35,000????

We would look at this as a long term investment and use an agent to manage (so up to £100 per month with the insurance etc..)

Any advice gratefully received.

thanks

David

fivesmaster

Just to make things more complicated.....can someone advise?

-I am the sole owner of the house to be let; for tax efficiency purposes my wife is not working so want to get her on deeds so she can use her tax allowance...so my question is, do we add her to deeds before applying for buy to let mortgage on this property? Would that mean the lender would take her income into consideration and reduce amount available?
Or do I get the mortgage first then get a solicitor to change the deeds (although I think the mortgage company would need to allow this...would they as she does not work????)
Have I explained this clearly enough?????
Help!

hamster2013

1. if you are married, i dont think your wife has to be on the deeds to be eligible for half the rent - so you can already use her tax allowance - best to check it with an accountant though.

2. you already have a £103,000 mortgage if I understand correctly - when you ask consent to let, the interst rate will go up! so considering it is 5% lets say, at 25 years - thats a monthly repayment of £602
if you rent it at £700 - the first hurdle you might get is that banks will be cautious and worried on the return - and quite fairly to be frank, as if you are using a letting agent who would charge £100 / month, you have already eaten up your 'profit' - so minus the extra charges related to land lording (gas certificate - refurbishment - finding new tenants (-1 month rent again)....) you are most likely to be out of pocket rather than having to worry about tax credit.

I would do this:
1. sell house and keep 30k on the side.
2. buy the £219k house with the lower mortgage - at that LTV you will get great offers reducing your monthly repayments.
3. find a £100k property in a town like leeds / manchester / birmingham...etc where the rental income would be around £600 (its doable as I have 4 properties - leasehold flats in those areas, and a new one just came on the market next to mine for £85k - which would generate also a healthy £600 rent) and get a mortgage of max £70k on one of those properties

thats just my two pence

fivesmaster

thanks Hamster have sent you a PM