Mortgage and general advice please

Bilk

Hi,

I would appreciate any advice that you could give me over this quandary.

We have had our house on the market for 6 months now, it is worth £300,000, it’s a nice house on a nice estate and it will eventually sell once the market picks up. However we need to move in the next 10 weeks due to my partner’s new job.

We are going to rent a cottage of one of the family for the sum of £350 a month and can stay there for as long as we want. To give the market a chance to pick up we have decided to rent ours for at least 6 months and expect (after management fees) to clear £900, the leasing company doesn’t think we will have a problem renting it out.

Now here is where I would like some advice as in 18months we will have paid off our mortgage.

How possible would it then be to keep renting our house and get another mortgage for approx £380,000 (our joint income is about £60k per annum and we are 36 and 37 years old). We would have no savings and only the £300k equity tied up in the other house. Also how much would this cost us a month?

I appreciate your advice and/or views on this

Bilk

dougk_2

It's an option though you are unlikely to get a single mortgage for the £380k. What can be done however is to remortgage your property on a BTL basis and use the money from that to fund a big chunk of the new house whilst the rent will cover the BTL mortgage.

You can then take a standard mortgage out for your new house for the balance (circa 200k?).

I suggest you buy a book on renting out your property to gain more knowledge. Renting your property for dummies is quite good.

On another point I am sure that the letting company has told you that you will need to pay tax on the income from the rent. I you are a higher rate taxpayer this means that they will take 40% of the income after allowable deductions. Take a look at the inland revenue website for more info in particular this document http://www.hmrc.gov.uk/pdfs/ir150.pdf

Bilk

Thanks Dougk

You have given me a lot to think about!

Cheers

Bilk

herbiesjp

Agree with dougk - seems a good option to look into

meanmachine_2

So the house has been on the market for six months. Uh huh.

You don't think it might *not* be worth as much as your wet-behind-the-ears EA says it is?

And what if the market doesn't pick up? If it hasn't picked up in your area by now, it's not going to. Period. Next month, taxes go up, IR rates go up. You think that's going to help people meet your asking price? Nope sorry.

If you're going to rent, you might be renting for a long long time. You have to consider that.

But of course I'm talking nonsense. Why not BTL half a dozen properties while you're at it? Nothing can *possibly* go wrong.