House buying advice needed

Grievesy

Hello fellow MSEers.

I am looking for some advice about house buying. I currently own a house which is still mortgaged (48k left), however due to a career promotion and transfer I am now renting and living in another house which is 80+ miles away from my mortgaged house.

The intention was I was going to change my mortgaged house to a buy-to-let mortgage and go through the proper channels of becoming a landlord etc but one of my family members offered to step in and rent it off me in a deal between family which means I don't need to bother with the landlord stuff and they pay a slightly discounted rent to me but it still covers 90% of my monthly payments. `

However my partner and I are fed up of renting and are looking to buy a new home near our current location and I am wondering what sort of impact me trying to get a mortgage will be seeing as I currently already have a mortgage.

Any help is appreciated. Thanks in advance.

glosoli

Unless you can produce a tenancy agreement, it is highly doubtful that they will take the rental income into consideration when working out affordability.

Therefore, although it will vary lender by lender, you will likely have to demonstrate affordability both for your new property, and the existing property so existing mortgage repayment in full, council tax, water rates, insurance costs etc.

As long as your income can show it's all affordable, and you have the funds for the deposit and stamp duty, it should be possible.

Was it more of a particular concern you had?

lincroft1710

Even if you rent a house to a family member, you do need to "bother with all that landlord stuff"

Ozzuk

lincroft1710 wrote: »

Even if you rent a house to a family member, you do need to "bother with all that landlord stuff"

Exactly...which means declaring the income from rent even if it's discounted, though you can discount your mortgage interest (not the repayment part). If you're a higher tax payer it becomes even nastier and income after tax may not come near your mortgage payments.

Don't forget the increased SDLT when buying the second property.

You'll also likely need a much bigger deposit (LTV) on the house you are buying if you already own a residential property - even if you aren't living there (I did when I owned two residential properties).

Finally, consider your position if mortgage rates increase significantly.

debred86

I have just rented my house out in order to buy a new one.

The bank i applied with wouldnt even consider me for a new mortgage it out until i had a consent to let notice from my original bank, a valuation of what income i was getting and a tenancy agreement.

TBagpuss

As others have said, you would still need to follow all the proper processes as a landlord. Plus you add a whole layer of complication if things go wrong. Would you feel able to evict your family member if they don't pay the rent, or if you need to sell the property? Can you afford to let at below market rate?

Why not simply sell the current property and use the equity to buy a new property to live in?

If you then feel that you can afford a buy to let property then do so, but at that time, buy a property you can afford and manage, and that you feel is a good investment.

Mrs36

Just something to consider in case you did go down that avenue, that most BTL mortgages require that you do not let to family members.