Buying another property while renting out current one

lm1981

Not sure if this is even an option but it has passed my mind. I have a house which is worth 200-210k and I owe £80k. I have refurbished it all to a high spec but it’s not big enough for us anymore so we are looking to buy another house for 340k.

my wife and I have no debt , loans etc and minimal outgoings (have cut back on all the luxuries we used to have in past eg top sky package etc). We earn £75k a year combined. 

If I were to rent out my current house I’d get about £750 a month. 

What I do not know is if it would be possible to buy the other house for 340k and keep existing one? 

Any advice welcome. 

Thanks 

greatcrested

Depends if you can afford £340K + the extra 3% SDLT and other costs, either from your savings and/or a 2nd mortage (plus of course converting your existing mortgage to a BTL).

What did your mortgage adviser tell you?

If I were to rent out my current house I’d get about £750 a month.

Based on what? A letting agent's optimistic sales talk? Remeber when doing your budget to inform your decision to calculate 10 months rent a year, not 12. And to include tax (at 40%?)

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Grumpy_chap

Have you asked a mortgage broker?

What deposit do you have for the second property?

Have you considered second property SDLT?

AdrianC

£750/mo raw yield on a property with £210k...?

That's abysmal. Just over 4% return, before all the expenditure and outgoings. And don't forget the £10,200 "additional property" SDLT you'd pay on your new home.

Right now, you have £130k equity. If you want to split that between two properties...
A. Let - £210k value, 75% LtV BtL mortgage = £157,500 mortgage, £52,500 equity.
B. Home - £340k value, £77,500 equity, £262,500 (77% LtV) mortgage.

£420k mortgage monkey to feed every month... North of a couple of grand, easily. Month in, month out. Even if you have a void in the let, even if your tenants owe you money, even if their boiler just blew up.

Are you planning on self-managing the rental business, or are you going to employ somebody to manage it?

I strongly suspect that you'll find yourself heavily subsidising your tenants - even before that £10k SDLT bill.