Letting home (instead of selling) to move?

Daisydoop

Hi. I've been thinking about this as a possibility for us but have no idea how it would work. We are currently saving as we want/need to move house, we have outgrown our current home and need more space for our hopefully growing family.
How hard is it to get consent to let on a property and if our home was let out would it have an affect on the mortgage we could get going forward? Obviously I know we would need to be responsible for the mortgage if the tenants failed to pay or moved out and there was a gap. But would it have an effect on affordability for our new house?

Anyone have any advice? Thank you in advance.

gazfocus

We did this and it worked out very well, however, I cannot recommend enough to use a mortgage broker if you go down this route.

We had the deposit for a new house but didn't want to sell our old house so we got a written rental valuation from 2 estate agents, then got consent to let from our mortgage lender. Armed with these, our mortgage broker was able to get us a new mortgage and our old mortgage was considered to be 'self funding' because the rental valuation covered the mortgage payments.

We actually ended up advertising our house on local Buy & Sell groups on Facebook and within 2 hours had 7 people booked to view the house. Two of those 7 wanted the house so we chose the couple we preferred and they've been superb tenants.

The only thing to watch out for is the letting agents that gave us rental valuations wanted the first months rent for finding tenants and then 15% per month for managing the rental, which is why we decided to do it ourselves....also gives us more control over who lives in our house.

Daisydoop

Thanks Gaz! Did it matter how much equity you had in the property?

gazfocus

Daisydoop wrote: »

Thanks Gaz! Did it matter how much equity you had in the property?

Not that I'm aware of. We only had about 12% equity in the old house but we did have a 25% deposit for the new house (although I don't believe this was a deciding factor).

amnblog

Equity in the old property can be a factor in the underwriting of the mortgage of the new property with some lenders.

Use a mortgage broker for this scenario.

Fizzy11

It's called a Let to Buy & there are different criterias with different lenders. Use an Independent Mortgage Broker that is free. It works well but you do need the knowledge of a Broker to make it work.

Thrugelmir

Why do you want to retain your existing property?

Daisydoop

Well I don't think we would be able to sell it for the mortgage amount I think we'll lose on it so if we didn't need to sell the house then we would just have the deposit to save for the new one and also it would be an investment for the future? Bad idea? Very open to opinions, tell me if I'm being silly thinking it's an option!

Daisydoop

Any thoughts please? Just kind of bumping for advice. Thanks.

getmore4less

What's it worth

What's the mortgage

What's the rent potential

How much have you saved
How much are you looking to spend on a new place.

Daisydoop

It's worth probably £95k. Mortgage is £98.5k.
The rental potential is probably 150% of the interest payment.
We will be looking to save at least 10% of any new property but it will probably be at the top end of our affordability. Will this make a difference?

Thanks.