buy-to-let, let-to-buy, or fresh mortgage ????

DesH_2

Hi all,

I’ve got a question for you experts. 

Working as a contractor for the last 18 years and having no pension I would like to buy a house to rent out as a future investment/pension.

My current house is in good condition, but no longer suits my needs. So I was thinking of keeping it and renting out, and then buy something else for me.

Current house worth about 300k, with about 120 remaining on mortgage. At present it can be rented for about £1200 a month. I'm 41, Single, no kids, earn about 70k net, and have about 120k in savings with no other debts.

So would I be best....

1. paying my current mortgage off with my savings and renting my current house out, and then get a new mortgage for a new house with a very high LTV, or

2. use my savings as a deposit on a new house and get a buy-to-let re-mortgage on my current house, or

3. pay off my mortgage with savings and then get a let-to-buy mortgage to release the required equity for the deposit on the new house, or

4. Something else?

What's looked at most favourably by the lenders ref credit searches etc

Thanks

K_S

@desh_2 As a higher rate taxpayer (70k net equates to 100k+ gross if I'm not wrong), I would strongly recommend that you either get some tax advice or doyr on how your rental income will be taxed before deciding to go down this route.

DesH_2

Hi K_S,
I've already used a few online calculators and I know its going to be steep, but what is the other option?
I'm not doing it for an instant profit, more to have something 20 years down the line.

Thrugelmir

Might be worth exploring pension options first. More tax advantageous than a BTL. 

DesH_2

Hi Thrugelmir,
Okay, but isn't it true that once the BTL is up and running, it should be self sustaining? 
I'm not concerned about making any profit from it pre retirement.   Once it is paying for itself, a pension could also be invested in, with the assumption that once the BTL has paid for itself, it will provide a monthly profit and you also have the matured collateral.
Where as a pension on its own is an immediate expense until retirement. 
What am I missing?