Renting my current house and buying another with girlfriend

PJH27

**PLEASE HELP:)**

Hi I'm wondering if anyone has done this? or can offer me any advice that may help me.

I bought my first house on my own and currently have an outstanding mortgage of around £115k - the house is worth around £150k.
I am thinking about buying a second property but this time jointly with my girlfriend.
Can I release some money that I currently have in my current house? and use this as my half of the deposit? then rent out the house that I currently own?
I would rather not sell the house as the area has been going up in price well for years and its quite a desirable place for people to live due to having a good school & commuter links.
I think i would be looking at jointly purchasing the second property for somewhere in the region of £100-150k. I earn £30k and my partner earns around £20k p/a. And we are both early 20's.

THANK YOU in advance to anyone who can help!!!

Comms69

PJH27 wrote: »

**PLEASE HELP:)**

Hi I'm wondering if anyone has done this? or can offer me any advice that may help me.

I bought my first house on my own and currently have an outstanding mortgage of around £115k - the house is worth around £150k.
I am thinking about buying a second property but this time jointly with my girlfriend.
Can I release some money that I currently have in my current house? and use this as my half of the deposit? then rent out the house that I currently own? - Potentially, it depends on your lender and if they'll give you permission
I would rather not sell the house as the area has been going up in price well for years and its quite a desirable place for people to live due to having a good school & commuter links.
I think i would be looking at jointly purchasing the second property for somewhere in the region of £100-150k. I earn £30k and my partner earns around £20k p/a. And we are both early 20's. - So how will you afford both mortgages?

THANK YOU in advance to anyone who can help!!!

Sell it, invest in something else. Being a landlord is hard work, and you haven't asked any of the right questions

[Deleted User]

yes you can, it is called a Let to Buy mortgage. Not all providers offer them as it is a grey area of residential and buy to let, most lenders prefer black and white. Plenty options around though

There is also the onward purchase that needs to be considered, some lenders will ignore the costs of your rented out property if it is self financing, some will require much larger deposits.

It is a fairly standard transaction for us in the industry but plenty of pitfalls if trying to research it all yourself.

I'd probably just sit with a broker and get them to do the legwork for you.

steampowered

I don't think your plan is a very good idea.

You could remortgage your current property to release funds. However BTL mortgages usually require a 25% deposit, so you are not going to be able to release very much if anything by remortgaging the property. BTL mortgages will also be more expensive.

Your plan will also mean you pay additional tax - tax on the rent, higher rate SDLT on the second property, capital gains tax on future price rises.

You would be taking on far too much debt compared to your income - putting you in danger of real difficulties if interest rates go up or your BTL has void periods.

You will be much better off selling the property.

Excess funds should go into your pension or a stocks & shares ISA, which is a much more tax efficient way of investing than buy-to-let property.

hazyjo

PJH27 wrote: »

I would rather not sell the house as the area has been going up in price well for years and its quite a desirable place for people to live due to having a good school & commuter links.
I think i would be looking at jointly purchasing the second property for somewhere in the region of £100-150k. I earn £30k and my partner earns around £20k p/a. And we are both early 20's.

So sell and buy together in the same area If you don't keep this one (I'd not recommend either), then you'll have more to spend on the next one together.

Cakeguts

You have to be able to pay both mortgages if you aren't getting any rent. You have to allow for the fact that you might get a bad tenant who doesn't pay any rent and it takes you more than 6 months to evict them. How will you pay both mortgages for 6 months or more if you are not getting any rent?

muhandis

It's not uncommon and I've done it myself though not a let2buy but in two separate steps. Given that your LTV is currently about 76%, The equity you can release (if any) is severely limited by the fact that you need a minimum of 25% deposit for a BTL mortgage and your lender options will be limited as a new landlord.

Definitely one for a broker, they can crunch the numbers and give you a realistic idea of your chances.

PJH27 wrote: »

**PLEASE HELP:)**
Hi I'm wondering if anyone has done this?

need_an_answer

OP ...its a serious question....

What do you know about being a LL and running a business?

Your answer will give a clue to the suitability of the plan going forward.

AnotherJoe

PJH27 wrote: »

**PLEASE HELP:)**

Hi I'm wondering if anyone has done this? or can offer me any advice that may help me.

Yes, dont become a LL, its much more work than you seem to understand, much more hassle, much more risk, and will mean you end up living in a worse house or in a less desirable area, or both, than if you sold up and used the equity in your new house.

MEM62

In my opinion you are too tight on equity to be releasing funds for your new house.
Have you also considered all the factors in letting your house viz;
* Responsibilities of being a landlord
* Costs of being a landlord
* Additional stamp duty
* The tax on your rental income - are you left with enough to cover the mortgage and other costs?

comedyseeker123

Early twenties and moving in with your first serious girlfriend.

No, rent for a year at least!

Or she can buy, you contribute to the running costs.