Interest only

topsales

I have a house which is mortgage free. I need to move areas for family reasons but with the market being so slow wondered about renting out my house ( I have a probable tenant) and buying another. I could afford a small deposit (say 10%) and wondered about an interest free mortgage - the capital to be paid when I finally sell my current property. I am looking to borrow about £120000 on an annual income (including rent of current property) of about £25000. Would this be feasible?

Annisele

topsales wrote: »

I could afford a small deposit (say 10%) and wondered about an interest free mortgage

I know that's a typo, but you're not going to get one of those

I think you might be better running this by a broker - it sounds as though you're pushing things on affordability, and you also have a potential issue with whether lenders will accept all your sources of income.

I also think lenders will be concerned about how you would fund your new mortgage while you were waiting for your current property to sell. It's usually a very bad idea to sell with tenants in situ, so you might have to evict them first - and then you might be unable to pay your new mortgage.

topsales

OOps! Meant interest only...I don't plan to sell current property until the market improves - say 5years? And wouldn't need to pay of capital for 10 years or so. I am 62 but still working on a self employed basis and plan to carry on doing so. So pensions 10,000 per annum, salary 10.000 per annum and rent at least 7,000. Any better?

Poppy9

What if ill health forces you to quit self employed work?

Who will benefit from the extra money you hope to achieve if house prices rise in 5 years and you sell for more?

Personally I would sell, if you can sell and buy and be secure.

topsales

It is just really difficult to sell right now! So am trying to find other ways of moving..

Annisele

There will be some brokers along in a bit to give you better information, but I think you're really going to struggle.

Some lenders won't do 90% loan-to-value mortgages - they require a deposit of 25% or 30% as a minimum. (Other lenders have pulled out of the interest only market completely).

Some lenders have a maximum age of 70 or 75, and they expect you to be able to afford to pay off the mortgage over the term (i.e. they expect you to be able to afford a repayment even if you don't take one). A repayment mortgage over an 8 year term isn't going to be affordable.

Some lenders won't take 100% of all your income sources into account.

What will you do if prices fall rather than rise over the next five or ten years? (That last might just be my own twisted hopes; I'm a wannabee FTB that can't afford anything...but it is still worth bearing in mind).

Selling your current property and buying outright would be much easier.

Edit: if you really need to move before you've sold your house, could you rent in the new area?

topsales

Have been trying to do that but have pets which seems to cause a huge problem..

Poppy9

topsales wrote: »

Have been trying to do that but have pets which seems to cause a huge problem..

If pet or rather pet smells are stopping you selling then they will be an issue renting. Tenants want clean, fresh smelling homes.

Sort out the pet issue if you can.

topsales

How? Kill them? Not an issue to be sorted out...sorry!

Poppy9

topsales wrote: »

How? Kill them? Not an issue to be sorted out...sorry!

Okay then stick with a house you can't sell and will struggle to rent.

Annisele

topsales wrote: »

How? Kill them? Not an issue to be sorted out...sorry!

Some pets are easier to rent with than others. A goldfish is unlikely to be a problem; a single tabby cat will be a problem some places but not others; six Great Danes and a horse will spook the most animal loving of landlords.

Is there any possibility a family member could foster an animal for a bit?