Buy a new house and let my current one - how?

Maria123456789890

Google cannot provide me with an answer so I ask if you have experience of this and to tell me how you did it.

I sold my place twice last year but was messed about when buying further on in my chain. I am not going to suffer that again. Having cut all ties and dropped my buyer and estate agent (and conveyancer too) I plant to rent out my place and have the rent pay off the mortgage with a little extra each month. I have salary which is why I think I could rent out my 1 bed flat and buy a house, having the rent pay the remaining mortgage on my 1 bed flat.

Have you succeeded perchance? If so, how.

kingstreet

You'd better put up all the figures so we can tell you if it's feasible, or better still, appoint an independent broker to piece the transaction together for you as you'll struggle to get is completely right as a DIY job.

kingstreet

To turn the current property into a let to buy, you'll need 25% equity on top of what you intend to borrow for the deposit for your next home. If you don't need to raise money towards the deposit, you can ask your existing lender for consent to let instead.

The rent will typically need to be 125% of the monthly mortgage interest assuming a rate of about 6% per annum to do the BTL remortgage.

You'll need a lender for the onward purchase willing to treat the let property/mortgage as self-financing, otherwise you'd need to demonstrate you can afford both mortgages from your income.

Be careful of the loan to value of the purchase. Some lenders will lend less for a "second property."

dimbo61

You will become a Landlord with all the legal responsibilities that involves and if you check out the Excellent advice that GM has for new Landlords you will get an idea of what that involves.
Now the income you earn for renting out your one bed flat will be subject to tax and other costs.
Any profit you make after all the costs can go towards paying the mortgage on the house you want to buy BUT very few lenders will take this into account when looking at Affordability for the new mortgage.
If you have lots of equity in your flat with a small mortgage outstanding it may be possible.
Do not forget the costs as many BTL lenders charge 1.5/2% arrangement fees etc.

amnblog

Experienced mortgage brokers handle this kind of case every week and are your best source of help and advice for this situation.