rent to buy advice needed please.

maypen111

Hi,This is my first post on this site. I am looking for some advice or suggestion on my particular position.

I have a flat which has no mortgage worth £100,000. I owe £15,000 (credit card and Tax debt). I earn £16,500 which with overtime comes to £20,000 per annum.I want to rent out my flat ( rental of about £375 per month) and buy another house for about £110,000. I would like to roll up my debt into the mortgage. I don't have a deposit.

Do the figures add up?
How would i go about it?
Where would be the best place to get this type of mortgage?

Any sensible advice welcomed.

real1314

Your figure don't add up.

You have £15k of debt and want to take on a further £110k. That would give you a debt of £125k with an income of £20k.

Ok, so you could work a "rent to buy" on the flat, but with a potential rent of £375 pcm, or £4500 pa, that would only get an interest only mortgage of about £56k based on 6.5% interest rates and 125% rent/mortgage ratio.

You'd then need to have a mortgage of £70k on the new property, all to be paid from your income of £20k.

Frankly a reurn of £4500 on a property worth £100,000 is a recipe for disaster. Perhaps you have over-valued the property?

noyk

I agree with above. You've said what you think you want to do and you've told us your situation but what is your aim? To pay of your debts or to invest in some property?

maypen111

Hi guys thanks for the replies.

1) The flat value is about 89,000 to 100,000 based on similar properties around here
2)The rental value is based on similar properties being advertised.

3) How much rent you get depends on the type of property and the area. I am in the West Midlands.
4) I want to do this as a long term investment.

What do you think?

real1314

erm, what you've just said doesn't change things.

£135k of mortgage. £1000 pcm. £375 rent = £625 per month to pay from an income of about £1250 per month after tax and including your overtime.

You might get rich quick, you might get rich slowly, but in the short term you're likely to get poor very quickly.
All the stuff about property values and rental returns, wherever in the country this is, is saying that this is a bad idea with those sort of figures.