Letting to buy (sort of)

somethingcorporate

Thanks for reading.

Current situation: Own & live in a house mortgaged with Nationwide. £225k fixed for 4 more years at a LTV of around 65% (with a hefty ERC).

We have seen a house we like for £375k and know we would have to move fast to get it. We have the money to put down a 10% deposit & over fees on this new house but wouldn't be able to sell our current one in time. Nationwide have said the process to gain consent to let is very straight forward.

Is it as simple as gaining that consent and then applying for a new mortgage in its own right to buy the new house? Assuming our current house took care of itself financially when rented out we earn more than enough to cover the new mortgage or is it more complicated than that?

We'd look to sell our current house in 12-18 months time and don't forsee any issue in finding tenants for our current home in the mean time.

The new house is better located and walking distance to the school we are looking to send our daughter to in 2 years time.

Thanks for any help or similar experiences.

SoCo

kingstreet

Yep. Get an ARLA registered letting agent to give you a written estimate of the rental income potential for the current property. Letter addressed to you.

Provided it washes its face (rent = 125% of monthly mortgage interest at 6% per annum or more) there are lenders who will lend you 90% for the onward purchase and will ignore the let in the background.

Nationwide will add 1% pa to the rate for CTL after 6 months, so keep your eye on the costs in the longer term.

Thrugelmir

somethingcorporate wrote: »

Assuming our current house took care of itself financially when rented out we earn more than enough to cover the new mortgage or is it more complicated than that?

And if it's empty or the tenants default? You are running a business. With it comes all the risks and rewards. So assuming that financially you'd be ok requires some more thought.

somethingcorporate

Thanks both. Thrugelmir, that is our thought entirely. Yes, we could afford to have voids etc but it would be pretty tight!

I think we'll play it safe and just sell this place first and be a chain free, hassle free buyer!