Sell or Re-Mortgage?

themachine_2

Hi,

Myself and OH have a property with no mortgage on it valued at £65000. We were thinking of selling it and using the money to pay off unsecured debts totalling £22000 and using the remainder to put down a deposit on new property and invest some. However, we have since thought about taking out a 75% mortgage on it and renting it out as i believe it is a good long-term investment. This would still allow us to pay off our debts with enough left over for a decent deposit on a new place however i have a poor credit rating due to late CC payments, therefore I know we will be limited as to the choice of lenders and rates available. I have heard that Chealsea BS are fairly reasonable regarding credit scores.

Any opinions would be much appreciated.

Thanks

luckyfool

themachine wrote: »

Hi,

Myself and OH have a property with no mortgage on it valued at £65000. We were thinking of selling it and using the money to pay off unsecured debts totalling £22000 and using the remainder to put down a deposit on new property and invest some. However, we have since thought about taking out a 75% mortgage on it and renting it out as i believe it is a good long-term investment. This would still allow us to pay off our debts with enough left over for a decent deposit on a new place however i have a poor credit rating due to late CC payments, therefore I know we will be limited as to the choice of lenders and rates available. I have heard that Chealsea BS are fairly reasonable regarding credit scores.

Any opinions would be much appreciated.

Thanks

You will need a Buy to Let remortgage on your property if you go down this route. What lenders will look at the case will depend on how bad you history of credit card payments is. If its the odd time and 1 month behind then at 75% most lenders can overlook it. If you defaulted on any, or were falling 3-4 months behind on different cards then you may find it more difficult with traditional high street lenders. Equally Chelsea Building Society do tend to be quite flexible on their credit scoring for the standard purchase mortgages, whether that would apply equally to a buy to let is a different matter as their criteria does vary. Even going outwith a high street lender, 75% should still be something that could be achieved. If so then if you pay off all credit then you would have £26,750 towards your deposit and other costs on a new purchase.

You should make sure you have a rainy day fund of savings that will assist if you have a void period where rent is not coming in and you potentially have to fund two mortgages yourself for a time.

sarkin

YOu may have no mortgage but £22,000 debt is a lot of money. I would take out a mortgage just to pay off the debt. I think you need to organise your own finances before you start to look at other forms of investment IMHO.

themachine_2

Thanks Luckyfool,

Yes, would be looking to put down deposit of £20000 on house worth around £140000 and put the rest into decent savings account. Although current level of debt is quite high at the moment, we woud be debt free (and therefore much better off each month) if we did remortgage. Do lenders look at this when making their decision or is it based soley on current outgoings?

themachine_2

Thanks Sarkin,

I realise that £22000 of unsecured debt is a lot of money and i'm not proud of it in the least. The reason i suggested a 75% loan is because i was under the impression that lenders had a minimum loan amount of around £40000.

Griptool

Mr Machine

If I read your posts correctly you have an asset of £65000 (Mobile home in tower hamlets?) and unsecured debts of £22000. You intend to raise a 75% loan on your mobile home - pay off your £22000 debt and buy a second home with a loan of £120000.

Although current level of debt is quite high at the moment, we woud be debt free (and therefore much better off each month)

Great idea Einstein as you would be debt free WITH A £168000 MORTGAGE:T

Its not my wish to offend, but, I think the midwife chucked to wrong bit in the bucket:rotfl: