Let to buy - some queries

vbt

Hi,

I’m really struggling to find any decent info on let to buy and the associated considerations so wondered if anyone had any advice/experience they could share?

My husband and I have a house in London that we bought with a mortgage 3yrs ago, and we have lived in it ever since. There’s a possibility that we may have to relocate to the North of England for work at some point this year, however this might not be a permanent move and we would like the option to come back to live in London at some point in the future so we don’t want to sell our home as we'd never be able to afford to start again and buy somewhere. We also don’t really want to rent a property in the north, we’d rather buy somewhere if possible.

We were thinking instead of a ‘let to buy’ mortgage but I’m struggling to find much information. We’d definitely use a broker for the actual processing of it, but in the meantime can anyone shed any light on the process?

These are the key bits of info:

• Our outstanding mortgage balance is £245,000 (current repayments of £1280 pcm)
• House currently valued at £550,000
• We had a rental valuation too which came in at £395 pw, or £1711 pcm
• We’d be looking to buy a property in the North at around the £250,00-£300,000 mark if possible

Does this seem feasible to people based on the figures above? I know that wouldn’t be possible on a repayment mortgage for our current property plus a repayment mortgage on a new property, but my understanding is that we’d move to an interest only mortgage and that the rent achieved would have to cover the mortgage interest repayments plus 25%, so 125% in total.

I’ve used various online calculators but still can’t work out how much we’re likely to be able to actually borrow?

I know there are also the new stamp duty charge increases, but we’re happy to pay these (well, resigned to them anyway!) as we consider it an investment, and believe our London property will rise in value further. I also know that we need to take property maintenance fees, insurance etc in to account and all the other bits and pieces like that.

Can anyone clarify what the capital gains tax situation would be too - would we be liable to pay this on both properties if/when we sold, or just one (which one?).

Also, I think that there have recently been changes to what’s tax deductible too, so if anyone can explain how that would impact us too, that would be great.

We’re both higher rate taxpayers and have a combined income of apron £120k. We have aprox £9k in savings.

Thanks in advance for any help you can provide!

amnblog

This all sounds like it will fit.

Lending on the current property is likely to be in the order of £300,000 to £315,000 max with most lenders, so you could raise enough for deposit on the new property.

(There is a nice little phone app called BTLcalc that can calculate BTL lending for you)

vbt

Thanks amnblog - will check out the app.

vbt

If anyone has anything else they can add would love to hear tips/info/advice. Thanks

sam2015_2

Very few lenders have specific let to buy products. TMW(The Mortgage Work) is one of them. Others have BTL with specific cindution for first time landlords. Have a look in TMW's website, will give u some info.
Speak to a professional about capital gain tax, etc. Talk to EA about rental charges, etc.
BTL is usually a long term investment. The 3% extra stamp duty will apply to your new purchase.
Good luck