letting own property

londongirl

Hi there,

Would someone be able to help me as to what the process would be (ie what to do first and at what stage - don't want to start things too early or late) with renting out my property and buying another?

Idea being to get a buy to let mortgage on my current flat where i live (keeping 25% equity in it as i believe buy to let must be minimum 25% deposit) and releasing rest of equity as deposit on new place with bf.

At the moment i think my flat would be worth between £145k and £160k but the difference would make a lot of diffence to what we could buy. At what stage would my flat be valued? Would someone give an idea before i had to pay for a proper survey? As its quite hard to know what to look for in terms of affordability for new property without knowing how much equity i can release. It's going to be tight otherwise i'd be a bit more free and easy but i'm going to need to take as much as poss from the buy to let.

Hope that makes sense.

What would be the first actual step you would take in doing this? (my first step is actually getting my bf to save more of a deposit as he doesn't have much) so realsitically this won't be happening for another few months but when it does what should i do first? See a mortgage broker?

Probably sounding a bit daft but when i did this before it was a process wtihout much choice! I bought with a shared equity government scheme - had no choice about lender, was moving from my parents so no complications, didn't need a deposit, and only saw 3 flats (all in same block as was all i could afford in the area) before making an offer.

This whole process now just seems difficult. I've been through the remortgaging process in the summer so know of the new regulations and how they affect things and had my flat valued in the summer but basically the guy didn't have a clue if i'm honest and the properties near me one sold for £140k in nov 2013 and my next door neighbours one sold for £160k in September but Zoopla is showing that its now fallen in price (which i think its probably true).

Thanks for help in advance.

amnblog

You can only go on sold prices.


If your neighbours one is the same and sold for £160,000 - there you are.

londongirl

so it's likely that unless prices drop drastically, the buy to let mortgage valuation will go with the last sold price of an identical flat.
I just thought that they might go with 3 different flats like my last valuation did - and the other one that sold was £140k albeit over a year ago.

Thrugelmir

Some lenders will be unhappy with the source of the deposit. Releasing equity is akin to leveraging. As merely increases the risk exposure to the lender.

londongirl

there would still be 25% equity left in the buy to let. Why would a lender be unhappy? And do you mean the buy to let mortgage company or the residential mortgage i would get on a new property?

perhaps i am mistaken then and this whole plan is going to fall apart - i had understood that it was quite common now for people to "let to buy" - ie let their current property, release equity to buy another.

Are some lenders more likely to do this than others? Can someone advise before i go and see a mortgage broker? I'm getting pretty worried about the whole process. It seems so stressful. Yet the alternative would be renting my place on a consent to let (or remortgaging) and renting somewhere with bf. The way house prices are going in London/South east though i doubt we would ever get back on the property ladder just always have the studio flat because if it goes up by 20% a 2 bed flat will also do the same but relatively speaking we will be no better off as the gains on the studio flat still won't allow us enough to make the leap to a 2 bed. (And this is looking outside of where i am now , not even hoping to stay on the edge of london , being realistic but also need to be within commuting distance for both of us (me Buckinghamshire and him essex!)