Renting out current home

Gam2015

Current situation we live in a 2 bed semi with no mortgage we was wondering if it was possible to mortgage current home and release 75% equity to put towards new home and leave 25% equity in on an btl mortgage is it possible to do this? Many thanks. 

AdrianC

Of course it's possible.

You simply take out a 75% LtV BtL mortgage on the let property... Then you get a residential mortgage on your purchase.

Whether it's a sound business decision is another question entirely.
I presume you've worked the numbers, to see how profitable this business will be?
What assumptions are you making for voids, bad debts, maintenance etc?
Will you be self-managing, paying an agent just for tenant finding, using an agent for everything?
How long will the after-tax profit take to cover the +3% SDLT on your purchase, let alone the increased interest costs on your home?

dimbo61

Yes it's possible 
Is it a good idea is a whole different matter !
What's your business plan ?
Are you a higher rate tax payer?
You talk of the royal " WE" so you and other half own the property 50/50 as joint tenants ?
Do you intend to manage the rental business or use agents ?
Maybe a good idea to speak to local lettings agents and do you have an accountant ?
Tye of property ? Condition ?
EPC ? GSC? EICR? PAT testing ? Legionnaires disease ? Fit for habitation ?
Yield ? 75%ltv yes but who with ? Interest rate and how long to fix for 2/3/5 years ?
You might want to join the RLA 
There are hundreds of laws, rules and regulations plus local council rules about housing.
Fire safety, 
Local rental market 
In many parts of the country there is HUGE demand for 1/2/3 bed properties.
Doing it right can provide a steady income.
Get it wrong and have a nightmare tenant and it could cost you dear.
Maybe selling now and putting all the money into your new home might be better 🤔

Gam2015

dimbo61 said:

Yes it's possible 
Is it a good idea is a whole different matter !
What's your business plan ?
Are you a higher rate tax payer?
You talk of the royal " WE" so you and other half own the property 50/50 as joint tenants ?
Do you intend to manage the rental business or use agents ?
Maybe a good idea to speak to local lettings agents and do you have an accountant ?
Tye of property ? Condition ?
EPC ? GSC? EICR? PAT testing ? Legionnaires disease ? Fit for habitation ?
Yield ? 75%ltv yes but who with ? Interest rate and how long to fix for 2/3/5 years ?
You might want to join the RLA 
There are hundreds of laws, rules and regulations plus local council rules about housing.
Fire safety, 
Local rental market 
In many parts of the country there is HUGE demand for 1/2/3 bed properties.
Doing it right can provide a steady income.
Get it wrong and have a nightmare tenant and it could cost you dear.
Maybe selling now and putting all the money into your new home might be better 🤔

I know what your saying trouble is we haven’t  really found the forever home yet so if we sell now we would be stuck for somewhere to live in the short term 🤔 

lookstraightahead

You could rent? 

Slithery

Gam2015 said:

dimbo61 said:

Yes it's possible 
Is it a good idea is a whole different matter !
What's your business plan ?
Are you a higher rate tax payer?
You talk of the royal " WE" so you and other half own the property 50/50 as joint tenants ?
Do you intend to manage the rental business or use agents ?
Maybe a good idea to speak to local lettings agents and do you have an accountant ?
Tye of property ? Condition ?
EPC ? GSC? EICR? PAT testing ? Legionnaires disease ? Fit for habitation ?
Yield ? 75%ltv yes but who with ? Interest rate and how long to fix for 2/3/5 years ?
You might want to join the RLA 
There are hundreds of laws, rules and regulations plus local council rules about housing.
Fire safety, 
Local rental market 
In many parts of the country there is HUGE demand for 1/2/3 bed properties.
Doing it right can provide a steady income.
Get it wrong and have a nightmare tenant and it could cost you dear.
Maybe selling now and putting all the money into your new home might be better 🤔

I know what your saying trouble is we haven’t  really found the forever home yet so if we sell now we would be stuck for somewhere to live in the short term 🤔 

Then don't sell, stay living in it yourself.

[Deleted User]

Gam2015 said:

dimbo61 said:

Yes it's possible 
Is it a good idea is a whole different matter !
What's your business plan ?
Are you a higher rate tax payer?
You talk of the royal " WE" so you and other half own the property 50/50 as joint tenants ?
Do you intend to manage the rental business or use agents ?
Maybe a good idea to speak to local lettings agents and do you have an accountant ?
Tye of property ? Condition ?
EPC ? GSC? EICR? PAT testing ? Legionnaires disease ? Fit for habitation ?
Yield ? 75%ltv yes but who with ? Interest rate and how long to fix for 2/3/5 years ?
You might want to join the RLA 
There are hundreds of laws, rules and regulations plus local council rules about housing.
Fire safety, 
Local rental market 
In many parts of the country there is HUGE demand for 1/2/3 bed properties.
Doing it right can provide a steady income.
Get it wrong and have a nightmare tenant and it could cost you dear.
Maybe selling now and putting all the money into your new home might be better 🤔

I know what your saying trouble is we haven’t  really found the forever home yet so if we sell now we would be stuck for somewhere to live in the short term 🤔 

Are you only intending to let the property short term? Have you factored the higher rate of SDLT into your calculations. 

You get Let-to-Buy mortgages which are similar to BTL but are for your circumstances. You get LBT mortgages with LTV up to 75% but the amount of rent you can get also forms part of the equation as the rent should be at least 125% of the mortgage repayments and for some lenders up to 145%. 

Bluebell1000

We did that a few years ago, as we didn't want to have a buyer waiting... we would only move if we found the perfect house. It worked for us, but there is a fair bit of effort (and cost- as well as extra stamp duty on your purchase) involved in maintaining a rental house as posted above, so you should think carefully about whether you are prepared to do that.