Help! Unique situation, wtb house and let-to-buy existing property!

bloo88

Hello MSE forum members!

I'm in a quite unique situation at the moment. I'm currently unemployed (partner is too) and won't be for the time being (reason, setting up a new business!). Our situation is that we currently live in a small 2-bed house, value is around £160-£170k and we own it outright. Whilst we enjoy living in our home, it is too small for our future plans (business and family) so we're looking to buy a new 3-4 bed house in our area, budget will be around £280k, which is reasonable for the area.

We currently have £190k of savings (this is seperate from our new business venture) and will be looking for a let-to-buy mortgage on our existing home for around 90K-100k with rental income of around £750 to £800 per month.

Given that we're both unemployed right now (the business hasn't generated any profits yet, as its still in start up phase), will obtaining this let-to-buy mortgage be a problem?

If anyone can give me some advice, I would be very grateful. Thank you!

Mortgage_Mark_2

Obtaining a mortgage while having no income will be nigh-on impossible, whether LTB or residential...

Thrugelmir

Sell and buy for cash , or wait for the business to earn you a living.

No income no mortgage.

ethank

If you have £190k in savings and can sell your house for £160k you will have £350k in cash and can buy your 4 bed at £280k and then still have £70k left over to perhaps secure a buy to let when you have an income from the business.

What you've described above is asking the lender to take all the risk whilst you take all of the reward, unlikely to proceed.

bloo88

ethank wrote: »

If you have £190k in savings and can sell your house for £160k you will have £350k in cash and can buy your 4 bed at £280k and then still have £70k left over to perhaps secure a buy to let when you have an income from the business.

What you've described above is asking the lender to take all the risk whilst you take all of the reward, unlikely to proceed.

hi, can you please explain how you came to deduce that the lender is taking all the risk?

The let to buy mortgage I'm after would be secured against the property I currently own, if I can borrow 90k against its value of 160k, that means I still have 70k of my own money in that property, or equivalent of putting down that same amount as a deposit. How does the bank have all the risk?

bloo88

Thrugelmir wrote: »

Sell and buy for cash , or wait for the business to earn you a living.

No income no mortgage.

Another option for us is to move out of our existing house, stay at my parents house temporarily (putting our stuff in storage) and renting the house out first - by that we'd have a rental income of around 9k per year, do you think this would suffice?

ethank

bloo88 wrote: »

hi, can you please explain how you came to deduce that the lender is taking all the risk?

The let to buy mortgage I'm after would be secured against the property I currently own, if I can borrow 90k against its value of 160k, that means I still have 70k of my own money in that property, or equivalent of putting down that same amount as a deposit. How does the bank have all the risk?

The bank has all of the risk because you have no income to pay them! The days of you being able to secure a BTL mortgage based on the rent only without affordability checks are mostly gone.

Thrugelmir

bloo88 wrote: »

How does the bank have all the risk?

With no income. You will become a liability. As the BTL is not guaranteed to operate in a cash positive manner.