House sale

pbfhpunk

Our buyer has pulled out just as all the contracts are being drawn up, he wanted a quick sale as he wanted to rent the house out and so we've done everything quickly and found a house that we love and really had to fight hard to get that one and don't want to lose it.

We were advised by our EA when they first came round that we could consider getting a BTL mortgage and renting the house out.

The house I own is worth around 140k and I have a mortgage of 49k and the one we're buying is 200k and we're having a 140k mortgage (which is all approved and we've sent off the offer to the conveyancers) using the profit to pay of debts and have a 60k deposit.

How does a BTL mortgage work? I would definately prefer to go through a letting agent as I want it to be as hassle free as possible and really just want
break even, not looking to make a profit we just really want to move to the new house!!

Any help will be totally appreciated.

Helen

kingkano

BTL mortgage you will only be able to realise 85% of the real worth (maybe 90% at best). You will need to check the rental value of the property, which should be 125% (or 110%) of any mortgage repayments. Dont forget agents charge 10-15% fees for letting (of the monthly rent).

So crunch your numbers with the above information. If you cant do it with only 85% of the old property and get 125% of the mortgage payment in rental yield, just stay well away.

Also do give plenty of thought to your own assessment of what the property market is going to do. If prices are going to go down, you wont just lose value off your home, your going to lose value of a 2nd property and need to find someone to rent it to keep the mortgage payments going.

vansboy

Quite simply, if you weren't thinking of enering the BTL business - 'cos that what it should be considered as, although soo many people looking for a quik £$£ have done OK, without thinking this way - I don't think it's agood idea.

There are so many potential problems, you'll soon find out about, that you'd be better off finding another buyer & delaying things as much as pos.

Saying that, if all the prices continue up, you'd be OK!!

VB

Doozergirl

Please don't do it. It's for entirely the wrong reason.

I just can't believe that people take BTL so lightheartedly and that EAs go around telling people it's a good idea. If you thought that you could potentially be commiting financial suicide because you were desperate to be 'happy' in your new home why you do it?

House prices do not always go up. The house could be worth less than it is now in three years time, interest rates could be much higher, we just don't know what the future holds for us and that is why we must be responsible and do as much to 'future-proof- our investments as we can. Just because you bought your house cheaply, it doesn't mean it is still cheap. You will be borrowing the full, current value of your old home between the two mortgages.