Letting out current house and buying another

samsam89

We are looking to upsize from our current property and were wondering whether renting out our current property and buying another one was an option. It's currently worth £190k and we have £130k remaining on mortgage with skipton. Our repayments are £612 a month and identical properties next to us have been successfully let in excess of £750 per month within days of being marketed. One just went let agreed for £835. We are looking at properties around £250k.

We would need to use some of the equity to form the bulk of deposit for our new home.

Is this something that lenders do? And does anyone have any experience of this? I seem to remember reading somewhere that some lenders can disregard your current mortgage when assessing your borrowing capacity, but I may have imagined it.

ACG

As a general rule of thumb, you can get around 75% of the properties value. So you can pull some money from the property.

Rent should stack up.

You may need to pay the higher rate of stamp duty, so double check that.

Thrugelmir

samsam89 wrote: »

Our repayments are £612 a month and identical properties next to us have been successfully let in excess of £750 per month within days of being marketed.

You are still responsible for maintaining and insuring the property. Will need to cover void rental periods. Lastly pay tax on any profit made. Given you wish to release equity and therefore increase your outgoings. Is there sufficient potential profit to make this a venture worth taking a risk for?

PS As a second property your stamp duty bill is going to £10k.

samsam89

Thrugelmir wrote: »

You are still responsible for maintaining and insuring the property. Will need to cover void rental periods. Lastly pay tax on any profit made. Given you wish to release equity and therefore increase your outgoings. Is there sufficient potential profit to make this a venture worth taking a risk for?

PS As a second property your stamp duty bill is going to £10k.

Certainly food for thought. The stamp duty aspect makes it a much less attractive or even viable option. I suppose I'm just wondering if there was a way to keep ownership of it, rent it out and allow it to "pay for itself" for a number of years and just use it as a nest egg. We're not actually looking for a short term profit/earner. More about keeping it for longer term as a retirement fund. Having looked at the small print applying for a consent to let would also raise the interest rate by 1%.