Mortgage advice - Buying new house, already letting out another

Funder

Hi all,

First time poster but have followed for a long time. I was hoping someone might be able to give me some advice please.

My wife and I are hoping to buy a new property, we currently live in her house which is totally in her name. I already have another property which I rent out with the permission of the lender. The rent easily covers the mortgage (mortgage costs £300pm, interest £120pm and rental income £525pm).

We need to buy our next house together but I wondered how the other property would affect a new joint mortgage application? Would the monthly payment be taken off my income in total or not taken into account at all seeing as the rental income far exceeds the cost. Do each mortgage provider have different rules about this, if so which would look most favourably please?

Any help gratefully received. Thanks.

Annisele

Different lenders do have different rules.

It's difficult for people here to tell you which lender will look at it most favourably. The people with the most knowledge about that - the brokers - aren't allowed to give you advice.

Plus, if you're tight on affordability there might be other things that matter just as much as your rental. (If you're not tight on affordability, the rental probably doesnt' matter much anyway.)

amnblog

Annisele is right here.

You can go direct to lender and hope you get lucky - or engage a broker.

Thrugelmir

Funder wrote: »

I already have another property which I rent out with the permission of the lender. The rent easily covers the mortgage (mortgage costs £300pm, interest £120pm and rental income £525pm).

As long as interest rates remain low your plan is sustainable. Also what happens when the lender withdraws consent to let and moves the mortgage onto a BTL basis.

nubbins

Hi Funder, The others are right but you can do a bit more research on lenders criteria yourself, if you type say "nationwide intermediaries" or "Natwest intermediaries" or whichever lender your interested in into Google you are taken to a part of that lenders website that tells you exactly what they will and won't accept, I've found it useful in the past.

dimbo61

You have given very few details and my crystal ball is cloudy today!
Are you selling the " Wife,s" house and using that as a deposit? Do you have savings? Well paid job ( Over £25,000 a year)
How much equity do you have in your rented property.
You maybe better off changing to a BTL mortgage and taking some of equity out of the BTL and using as a bigger deposit.
Get yourself a "whole of market" mortgage broker as his/her costs can be offset against rental profit and they can find you a lender for the BTL and a good deal for your next HOME

ACG

One thing to note is that you can not use the help to buy schemes on the new property.

Funder

Thanks for all your help.

I just wanted to keep it as brief as possible but happy to give more information.

My wife's house is worth about £200k, with about £80k equity, we'll be using this and savings for the deposit for our new house. We don't want to get a huge mortgage and try and keep it below 75%Ltv for the best rate.

My house which I currently rent out is worth about £110k and I have about £50k equity. The mortgage company are happy for me to rent it out for as long as possible. I have a long term tennant who easily cover the mortgage.

I earn about £42k per year, my wife currently works part time earning £25k, but will eventually go full time again in the next year or two.

I'll check out some brokers - has anyone got any recommendations? I was just hoping someone might have had a similar experience so I can go direct if possible.

I've phoned up post office who said they wouldn't take the other mortgage into consideration as the rent far outweighs the interest on the mortgage. 125% is the figure they use. It would be nice if there are other options out there?

Funder

Just to say if anyone is interested, Nationwide seem to have similar rules to the Post Office. If the rent is more than 125%. Hopefully should be ok applying for one of these 2 mortgages.