Would we be able to rent current property and buy new one?

scottishgirl87

We have literally just started thinking about renting our current flat out and buying another house to live in.

We bought our flat in 2013 and at the time it was valued at £150k. We switched to a new mortgage deal with our lender earlier this year and they valued the property at £167k. I have also seen that in May and July this year 2 other identical properties in our estate have sold around the £160k mark.

Assuming our flat is realistically still worth £150k, we owe £112k on it and I can see other properties in our estate are advertised for rent between £650-£800 per month. Would we realistically be able to become a buy to let?

I'm guessing that we could but would be unable to take any equity from the property to use as a deposit for a new property as this would then take us above a 75% LTV?

As I said, we have just started thinking about this so I would appreciate any advice or a point in the right direction.

murphster

I'm in the process of doing the same thing, although no expert. Basically you can, but you might have a problem if you don't have any separate savings for a deposit for the new place. Most btl mortgages are 75% ltv, which you have based on 112 /150, but in my case I needed to release some more equity to put towards my new house, 10% of the new house, if you don't have separate savings then you probably don't have enough equity, if the house is worth 167 then you would have about 17,000 for 90% ltv, presumable you would want to spend more on your next house.

scottishgirl87

murphster wrote: »

I'm in the process of doing the same thing, although no expert. Basically you can, but you might have a problem if you don't have any separate savings for a deposit for the new place. Most btl mortgages are 75% ltv, which you have based on 112 /150, but in my case I needed to release some more equity to put towards my new house, 10% of the new house, if you don't have separate savings then you probably don't have enough equity, if the house is worth 167 then you would have about 17,000 for 90% ltv, presumable you would want to spend more on your next house.

Thanks for replying. Looks like I'm on the right train of thought anyway.

forgotmyname

Do you have enough money put aside to pay all the bills for at least a year?

Parents considered doing this when the sale of their house fell through late in the process. Mum mentioned they were thinking about renting their house out instead of selling it and got a tale of woe from her friend that had a nightmare tennant than caused thousands of pounds worth of damage to the property and only paid 2 months rent depsite living there for over a year.

These tennants may have been exceptions as they knew the legal process and she ketp falling down having to repeat processes.

Certainly put them off renting as they wont be living local to keep an eye on the place and having to travel several hundred miles backwards and forwards didnt appeal.

scottishgirl87

forgotmyname wrote: »

Do you have enough money put aside to pay all the bills for at least a year?

Parents considered doing this when the sale of their house fell through late in the process. Mum mentioned they were thinking about renting their house out instead of selling it and got a tale of woe from her friend that had a nightmare tennant than caused thousands of pounds worth of damage to the property and only paid 2 months rent depsite living there for over a year.

These tennants may have been exceptions as they knew the legal process and she ketp falling down having to repeat processes.

Certainly put them off renting as they wont be living local to keep an eye on the place and having to travel several hundred miles backwards and forwards didnt appeal.

Definitely something to think about. We would still be living locally though so within easy reach. Nightmare tenants do worry me but like I said we're in the very early stages of considering this, it's probably a bit of a pipe dream really!