Interested in Mortage on Second Property

BarryRagged

Hi everyone,

I'm starting to think about moving and in a position to potentially keep the existing property and rent it out but never done this before.

Current property is worth approx £400k and mortgage is approx £100k.

I'm keen to understand what would be considered in the calculation of how much I can borrow. So if I'm planning to rent out the current property will that rental income be included? I have read that many lenders don't consider rental income. If not would the equity I have in the current property work in my favor? Also can I free up some of the equity in the current property to put towards a deposit on the new property?

I appreciate these might be basic/naive questions but as I said I haven't done this before - only ever had a single property at a time. I can/will speak to an advisor if I get further along this path but I'd like to gather some initial info first if possible so I know what I need to consider.

Thanks!

amnblog

Some Lenders will consider the income from the property. Some will ignore everything if it pays for itself with the rent. Some will consider the mortgage payments for affordability but not the rental income.

You can raise extra on the current property subject to underwriting.

A case for a broker dues to these complications.

You will pay higher stamp duty on the purchase at 3% of the purchase price in addition to the standard rate.

Thrugelmir

BarryRagged wrote: »

So if I'm planning to rent out the current property will that rental income be included? I have read that many lenders don't consider rental income.

The issue for lenders is that if the property generates no rental income. Then not only will you have a second mortgage to service but also additional costs to pay as well. If the property is unencumbered i.e. no mortgage. Then it obviously presents a different case entirely.

Could you afford to pay 2 properties from income?