2nd mortgage help, or best options

miss_sparkle

Hi, wonder if anyone could offer me some advice on getting a new mortgage when already owning a property, and how affordability work in this instance or is there a better option?
I'll try to keep to the facts

Husband earns -£70k plus £20k overtime (started job 1 year ago)
Me - just had baby so not working at mo
Debt - cars on contract hire £650month (in my name only)

Current mortgage - owe £154k £319 month interest only
Secured loan - £10k £90 month

Total mortgage payments £409
House valued at £180k but not getting offers anywhere near this, they have been around £166k. We bought at the boom in 2007 and lost a lot of money on the house since we bought it.

So we have little or no equity in current home, someone suggested renting it out as rental is good in our area.

Rental income - £750 month

If I put In afford calculators it asks if we have tenancy agreement, obviously atm we don't coz we live here but we would if we were to move house? Not sure how it works, does it have to be rented out for so long, does it need to be repayment mortgage?

The extra £300 a month rent we would pay off the mortgage to reduce the loans.

We need to buy a 4 bed in another area for various reasons inc work, around £220k we have saved a 10% deposit from the start of this year.

Another option is to rent ours out & then just rent in the area we need to be but obviously it would be better to buy than rent

Or take a loss/break even from current house and just start again with a new one

Thrugelmir

While interest rates are low it makes sense to stay as you are and save. While keeping the property on the market. Renting the property offers out you little as you've little equity. Rising interest rates won't do anything to improve it either.

While £300 a month sounds attractive. Any profit made from letting will be taxable. There's no guarantee that the property will be fully let or that the tenants won't default. In addition you've still to maintain the property, as in time kitchens, bathrooms, windows, boilers etc will need replacing. So everything needs to be thought through and costed properly.