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Renting out home in order to buy another?
hannah_kate90
Posts: 1 Newbie
Hi,
I'm wondering if anyone can help me. We've recently had a baby and are considering renting out our home and buying a better one. I was just wondering if this is even possible? We wouldn't have a deposit for the new home, but we do have quite a bit of equity in our current one. It is now worth 250-265000 so we have 103000 equity at the moment. I think it would rent quite easily. Is there a way round the deposit situation? Would the extra income generated from renting the property allow us to secure a larger mortgage for our new home?
Thanks x
I'm wondering if anyone can help me. We've recently had a baby and are considering renting out our home and buying a better one. I was just wondering if this is even possible? We wouldn't have a deposit for the new home, but we do have quite a bit of equity in our current one. It is now worth 250-265000 so we have 103000 equity at the moment. I think it would rent quite easily. Is there a way round the deposit situation? Would the extra income generated from renting the property allow us to secure a larger mortgage for our new home?
Thanks x
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Comments
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hannah_kate90 wrote: »Hi,
I'm wondering if anyone can help me. We've recently had a baby and are considering renting out our home and buying a better one. I was just wondering if this is even possible? We wouldn't have a deposit for the new home, but we do have quite a bit of equity in our current one. It is now worth 250-265000 so we have 103000 equity at the moment. I think it would rent quite easily. Is there a way round the deposit situation? Would the extra income generated from renting the property allow us to secure a larger mortgage for our new home?
Thanks x
You would only be able to take half your equity out as most lenders will only lend 75% of the value of a BTL so you would have a deposit of about £70k and of course you would need to pay stamp duty and fees out of this.
You would also need to ensure the rent you receive would cover 125% of your mortgage. The rent you receive minus the mortgage interest would be taxable at your current rate so 20/40%. You will also need to pay the mortgage so I doubt you would get a larger mortgage for a new house.
There is a lot to think about, read the new LL section on this forum to read all the resposibilities. IMO it is hard to be a LL without any funds behind you, what if you suddenly need to pay for a new boiler or a new roof!
You also could have the proverbial tenant from hell who doesn't pay and trashes the property, I have yet to have one but I do keep the funds available in case I do!
Think long and hard before you do this.0 -
Read
New Landlords (information for new or prospective landlords)
Letting Agents (Tips for selecting, and tips for sacking them)0
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