Buying a new house whilst keeping existing house

RenegMC

Hi

So looking for some advice on this situation:

TL;DR - want to buy a new place using rent from current place to part fund the mortgage on a new place, and top up with wages.

- We currently live in an area that has become a bit of a dive unfortunately (it used to be lovely 10 years ago) - our street now has about 70% housing association tenants (no reflection on them per se - I'm sure the majority are fantastic tenants - ones on our street aren't), where we've had issues with violence, shouting and noise at all hours, abandoned cars, break ins and smashed car windows, and its become a dumping ground for litter, beer cans strewn across the road, and all sorts of bags of rubbish are left at the top of the road. The council do nothing.

- The house we currently live in is paid off completely. Equivalent houses on our road are being rented out at around the £1300 pcm mark.

- Currently I am fully employed, and am on £30k pa, which will realistically rise to about £45k within about 18 months. There is a deposit fund of about £30-40k available for a deposit but it'd be preferable if as little of this was used as possible.

- What we want to do is move out, and find a new house outside of our current area, but because we do not wish to sell this property, I was trying to think of alternative ways of funding the new place.

- What I've been playing with in my mind is to

get a mortgage in my name (solely) on a new place (even though I couldn't get MUCH lending on my own)

Rent out the current property, market values it at approx £1200 pm. On top of that I could put about £800 pcm to the mortgage, giving a total of about £2,100 a month for a mortgage.

On the basis of my wages the total house price realistically possible (if we include the deposit) is about £120k on a 4 times multiplier (which in itself is unrealistic I think?) But the fact we have the potential to add a significant chunk of cash from the

1) Would a lender look at me with the wage I'm on or is it simply too low? On this sort of set up what sort of house price could we realistically look at?

2) Could this be done without the use of a deposit (given we have the potential to part fund the new mortgage using the current place), and would the current house have to be put up as collateral?

3) Has anyone else done this, and if so how did it go, and were there any unexpected pitfalls?

Thanks,

kingstreet

Your plan won't work as lenders don't do what you are suggesting.

Remortgage the let upto 60% to get the best let to buy rates and use that as your deposit.

Then, raise a mortgage on the purchase to fund the remainder. Provided the let is self-financing, the lender for the purchase should ignore it and not "tax" you the cost of the mortgage on the let.

If you end up with a 60% mortgage (or less) on the residential mortgage, you will have the best rates on that as well.

Speak to an independent broker recommended by a friend or relative for full details.

xylophone

we do not wish to sell this property,[/QUOTE

Why not?

phoebe1989seb

xylophone wrote: »

we do not wish to sell this property,[/QUOTE

Why not?

Agree....if as the OP says the area has become "a bit of a dive", why would you want to keep it? Is it a popular place to rent? Would it be difficult to find good tenants?

Cornucopia

Putting it forward as a Let-to-buy will allow you to stay in the first house until the purchase on the second is complete. Similar terms and rates to BTL.

Raising a mortgage on the first house not only fits in with lenders' expectations, but is also more tax efficient. You can offset the mortgage interest against the rent.