Let to buy?

ajpaul

Hi allWe are considering moving in the next few months, but renting out our current property rather than selling. We have a small mortgage on our current property, which we could pay off with savings, but that will mean not having a deposit to put towards the mortgage on the new place. Is a Let to Buy mortgage an option in this situation (i.e with 100% equity on the property we are hoping to let?) We're confident with regards to potential rental income, so the question is more about getting a near 100% mortgage on the new place with no deposit to put towards it.
All opinions welcome.

audigex

When you say a small mortgage, what are your monthly payments, term and equity?

How affordable will the repayments on the new property be?

If you have enough equity and it's affordable enough, you should be able to get a small BTL for the remainder (possibly even for a longer term), then use your savings towards a new residential mortgage.

If you can afford to do it without any rental income, it shouldn't be a problem (then the rental income becomes overpayment or savings). If you can't afford to do it without rental income then it all comes down to affordability and how much rent you'd need etc (ie whether you can absorb 6 months with no tenant). You're confident of the rental income, but that doesn't really matter to the lender.

You have no chance of getting a 100% mortgage nowadays: 95% may be possible.

You need to sort out your numbers and sit down with a decent broker: but my plan in your situation (if you can find a lender who agrees) would be to get a BTL on the current property which, if you have enough equity, should be absolutely fine even if empty some of the time, as your mortgage payments will be so low. Then use the savings towards the new place.

ajpaul

Thanks for the reply audigex. Our property is valued at about £240 000. Mortgage has £14 500 remaining on it and we have savings of £16 000. Repayments are £328 per month, plus we are currently overpaying by an additional £150 a month. Rental income on the property would be around £850 pcm.We are looking to buy for up to £300 000. We could just sell, and take on the extra £60 000 of borrowing, which would be comfortable for us. We were hoping though to keep the current property as a longer term investment if at all possible.