Want to buy a second property. How can I calculate based on income and outgoing cost?

LiveOnce

Hi there,

I would like to look into buying a second property where I can live. I have already looked at some mortgage calculator website which given an estimate of how much I can borrow based on what I earn and my deposit.

However, these don't take into account my current household bills etc so is there a website or a tool which can help calculate realistically how much it will cost based on my salary, savings, and monthly outgoing costs such as council tax, gas and electricity bills, phone etc?

Alias_Omega

You don't need a site, just write them down and add them up.

Can you afford 2 mortgages with an empty property?

bigfreddiel

When I moved a few years ago I had an empty house for a while.

It cost about £300 a month to keep it going

Standing charges on gas, electricity and water.

Rates, insurance as well.

Cheers fj

LiveOnce

Hi both,

Both of the properties will be occupied.

da_rule

LiveOnce wrote: »

Hi both,

Both of the properties will be occupied.

What will be happening with your current property? Will you be renting it out? Letting someone live there for free etc?

Cornucopia

LiveOnce wrote: »

Hi both,

Both of the properties will be occupied.

By you?

Some lenders have special rules for multiple properties and some will allow any split of mortgage amounts up to the total of their normal maximum. If you are living in both properties then only residential mortgages are appropriate (not BTL, etc.)

Some expenses will double (i.e. you will be fully liable on both properties). Some expenses will be less than double as they are based in part on usage. You may be able to save money by insuring your car(s) at whichever address is cheapest.

LiveOnce

I'll be letting someone live there (family).

Thanks Cornucopia I hadn't realised that would be something to bear in mind.

Does that mean it's more trickier to buy a second home? Even though it will be my main 'home'.

da_rule

When you buy it, you'll be liable to the higher rate of stamp duty.

In terms of costs, you will have the costs for your new house (bills, mortgage, insurance etc). For the old house you will have any costs that you are still liable for (mortgage, insurance etc).

Your income will then obviously be your earnings (salary and rental income). Don't forget to take away any agency costs from the rental income if you are using an agent.

Another thing to think about, is if you have a mortgage on your current property, you'll need lender consent to rent the property out. Some are a bit against renting to family.

Cornucopia

LiveOnce wrote: »

I'll be letting someone live there (family).

Lenders are particularly wary of these arrangements.

Does that mean it's more trickier to buy a second home? Even though it will be my main 'home'.

Overall, yes, it is more complicated. The figures need to work across both properties, the Lender(s) have to be happy that the purpose of both properties is appropriate, and the tax position is more complex (SDLT, CGT and Income Tax, if you are receiving rent).

getmore4less

Work out what you can afford, that should be easy.
How much free cashflow can you put to this new debt?

chances are there will be a lender that will give close to that.

from your £per month available cash you can then work out max borrowing on max term and an affordability interest rate.

if that's enough to buy a place you want with your deposit(might need to be decent %) then you can look further and probably best to get a decent broker on the case.

LiveOnce

Hi guys,

I worked it out. Thank you for your suggestions.

My costs are roughly £1,100 a month taking into account my current mortgage + gas and electricity + home insurance + furniture payments + groceries and food + phone and Internet bills.

After this I was able to roughly estimate how much I save each month.

Once the banks open tomorrow I will arrange an appointment and see what they say.