mortgage or rent deposit?

zhola

Hi,

i am just after a bit of advise really.

I currently own my own home but i need to move somewhere with out stairs. I do not have enough monney in cash for a deposit i am relying on the quity in my house.

However i am aware that the market is very slow so i was hoping to rent my current home out (i think it would make a great rental property) as my disability has progressed quite quickly so i need to be without stairs asap.

If i was to buy a second home and remortgage my current home to a rental property what happens with the equity? can i still rely on it for a deposit on a new home? how is the house valued to change to a buy to let?

Thank you for any advise you can give.

kingstreet

To remortgage to a let to buy product, you'll need to leave 25% of the equity in the property. The rent will need to be 125% of the monthly mortgage interest, assuming a mortgage rate of perhaps 6% pa.

The lender's chosen surveyor will value the property and its rental potential.

The money you raise can be used as a deposit for your onward purchase and you'll need a lender which will ignore the let property/mortgage in the background, as many would "tax" you the mortgage payments, reducing the amount you can borrow for your purchase.