Mortgage Free - My ideas and anyone done similar?

moneyuk

So I am mortgage-free on a property valued at around 220k. It's a 2 bedroom Bungalow. I earn around 29k before tax per year. I work from home, self-employed. 

I am thinking, all be it in a difficult time of maybe renting mine. Using that income to help pay for another home. I want to buy possibly a run-down bungalow again and go forward like.

Anyone here done similar and in terms of my income and how much my current home is worth can anyone give me advice on what I could borrow?

Thanks

AdrianC

How much rental income would you get?
What would you need to spend to make it ready for renting?
Would you manage your letting business yourself, or pay somebody else to do it?

If you're looking to buy a project, will it be mortgageable?
How much equity will you need to buy it and do the work on it?

How long will the after-tax profits of the let take to cover just the +3% SDLT on this purchase...?

If you remortgage the current property onto a BtL mortgage, you're typically looking 75% max LtV, so £165k. But, at that level of gearing, you will probably be close to subsidising your tenants every month - even before you consider repaying the mortgage and covering that SDLT hike.

dimbo61

So you have £220K equity in your current home.
Many people enjoy buying and selling while moving up the ladder.
Sell your current home and buy a project to live in and refurbish !
You can get a mortgage of 4/4.5X your Income and with the current equity you should be able to find a suitable project.
Maybe add a side or rear extension ( or both ) as more floor space can add value.

moneyuk

AdrianC said:

How much rental income would you get?
What would you need to spend to make it ready for renting?
Would you manage your letting business yourself, or pay somebody else to do it?

If you're looking to buy a project, will it be mortgageable?
How much equity will you need to buy it and do the work on it?

How long will the after-tax profits of the let take to cover just the +3% SDLT on this purchase...?

If you remortgage the current property onto a BtL mortgage, you're typically looking 75% max LtV, so £165k. But, at that level of gearing, you will probably be close to subsidising your tenants every month - even before you consider repaying the mortgage and covering that SDLT hike.

How much rental income?
"Around £850 to £950 per month"

What would you need to spend to make it ready for renting?
"Around 5k"

Would you manage your letting business yourself, or pay somebody else to do it?
"Don't know not thought that far ahead yet"

If you're looking to buy a project, will it be mortgageable?
"Not looking for anything too complicated in terms of building work intinally" 

How much equity will you need to buy it and do the work on it?
"Don't know yet, I have savings of around 40k also"

How long will the after-tax profits of the let take to cover just the +3% SDLT on this purchase...?
"Not worked this out yet"

So these are things to think about, and my question was looking for anyone else whos been in similar positions to give ideas. 

moneyuk

dimbo61 said:

So you have £220K equity in your current home.
Many people enjoy buying and selling while moving up the ladder.
Sell your current home and buy a project to live in and refurbish !
You can get a mortgage of 4/4.5X your Income and with the current equity you should be able to find a suitable project.
Maybe add a side or rear extension ( or both ) as more floor space can add value.

Thanks, yes selling the current place is an option. Then just moving on with money from the sale and my wage/savings of 40k.