Let to buy + maternity leave + new job = possible?

cassowary27

So much is going on for us, I would like some input from wiser heads.

We are a couple in our mid 30s and we own a small house in an expensive south east town, London commuter belt. This is worth about 420,000 and we owe 280,000 on it. 

Almost a year ago, I got a new job in a much cheaper northern town. We got consent to let, moved up here and let out our former home.

My wife now has a job in the new northern town too. It's a good job but a small salary drop from her previous job in the south east.

We have an almost 3 year old and another baby due at the end of August. My wife's new employer knew about the baby from the start and are happy for her to take maternity leave for a year and then resume the job in July 23. She has a 6 month probation and will be 4 months into it when she goes on leave.

The obvious thing is to sell our old place & buy a new one, but I can't help thinking it might be smarter to change to a "let to buy" arrangement? It brings in 1200 a month which has been a very helpful extra boost to our pay packets.

We also have approx 40,000 in savings to put towards a deposit on our new home. I earn 45k and my wife earns 40k, plus we would have about another 8k per year from the rent on our former home, after expenses. So combined income of 93k.

My wife thinks I'm nuts and there is no way a lender will like her new job + salary drop + maternity leave arrangement. She's also worried about the higher stamp duty, which I think we would have to pay? But I believe we could press our advantage, and have two properties instead of one as a result of the move, as well as a much bigger place for our growing family with the cheaper property up here. 

So, be honest - am I mad for wanting to do this? Would lenders look at the above and lend on that basis? If so, what kind of price range could we look at in our new town?

Or should we forget the idea and just sell up our accidental investment & buy something up here?

K_S

@cassowary27 I don't have any advice on whether to continue letting or sell.

With respect to the mortgage aspect of your question, technically it's not a let-to-buy anymore as you've already moved out, let the property. However, it should be fairly straightforward to remortgage the property to an interest-only BTL mortgage, release equity (you're unlikely to be release much/any equity given the monthly rental of £1,200 and the current loan size of 280k).

Once it's on an I/O BTL mortgage, it should be fairly straightforward to find a lender that will disregard the background BTL property and (if needed) consider the rental income to boost affordability.

As long as your wife intends to return to her pre-maternity income, the employer is willing to confirm the same (if needed) and childcare costs (or alternate arrangements) are accounted for, you should be able to have lenders that will consider her basic salary for mortgage affordability purposes. 

dimbo61

You will pay 3% extra stamp duty which will be 6/12 months rent.
If you sell the property down south you will have £140,000+£40,000 to put towards the new much bigger beautiful family home which you and your family can enjoy every single day.
Your already close to higher rate taxpayers and the Rent will push you into the higher rate.