Renting existing to buy new

Zippeh

I have a question regarding renting out existing property and buying a new one.

I currently own a house which is on the market for £265000 with no mortgage. We're hoping to move house and have seen a house which we love for £3900000.

We have access to around £190000 in cash.

One of my ideas is renting out my current house (I'm guessing it would realise between £850-950 pcm), and taking out a BTL mortgage on it for around £155k (below 60%ltv) which would cost me roughly £550pcm.

Coupled with this I would take out a mortgage of £110k on the new house which would cost £350ish a month.

My thinking is that the rental income would pay for the mortgages (maybe not fully after tax etc), and would allow us to buy the house we want quicker in case we miss it.

One of the sticking points is the Wales Land Duty for second homes which would cost over £21k on the new house as that would technically be the second house. But, if we sold our current house within three years, then we'd get the difference back from what we would have paid if not a second house.

We earn about £5k a month between us NET (and after pension payments) so I think we could absorb some months where there was no rent.

One of my concerns is that the housing market could take a tumble before we sold our house. But I guess that's just the nature of the risk.

Is there anything else I need to be considering?

Thanks in advance!

sal_III

Zippeh wrote: »

My thinking is that the rental income would pay for the mortgages (maybe not fully after tax etc), and would allow us to buy the house we want quicker in case we miss it.

And who is going to pay you for all the hassle and expense of being a LL?

Have a read round here, plenty of posts on the matter. Rarely a good idea, there are better ways to invest spare cash, than BTL in the current market.

Zippeh

I already own one BTL property in a 50/50 partnership with a friend of mine, so I'm aware of the hassles and expenses that can come with it.