Let to buy advise please

Poe79

Hi, 
Just looking for some basic advise on let to buy. 
Sorry if I don't have all the info to hand but this is something I've only just considered so haven't researched anywhere else yet or got accurate valuations. 
We own our current property or right with no debts. 
The house is worth between £180,000 and £220,000 (recent sold prices on identical built houses in same road) 
Average rentals seen to get £900pcm approx. 
How good income £26,000 approx. 
Deposit £10,000 but could raise more 
Looking to buy house in similar price bracket as current house.
Did this sound feasible and would it be a good route to go down or is there a better way of keeping this house and buying another? 
Many thanks, 
Poe

BarelySentientAI

What do you intend to do with the house you already have?

If you're planning to become a self-run landlord, make sure you're aware of everything that includes.

_Penny_Dreadful

Poe79 said:

Hi, 
Just looking for some basic advise on let to buy. 
Sorry if I don't have all the info to hand but this is something I've only just considered so haven't researched anywhere else yet or got accurate valuations. 
We own our current property or right with no debts. 
The house is worth between £180,000 and £220,000 (recent sold prices on identical built houses in same road) 
Average rentals seen to get £900pcm approx. 
How good income £26,000 approx. 
Deposit £10,000 but could raise more 
Looking to buy house in similar price bracket as current house.
Did this sound feasible and would it be a good route to go down or is there a better way of keeping this house and buying another? 
Many thanks, 
Poe

You’ll need quite a large deposit to buy another £180k to £220k property with an income of £26k. Most of the £10k you have saved will be used paying for the higher rate of SDLT/LTT/LBTT you’ll need to pay on the purchase. 

I think as a rule of thumb lenders go to 4.5 times your gross income so that would be a mortgage of £117k and you’d need to fund the rest through savings and/or releasing equity from your current home with a let to buy mortgage. 

Maybe one of the mortgage brokers who regularly post on the forum would have more insight but to me it seems like a lot of debt service on a not very high income. 

kingstreet

On the LTB, I'd expect a max mortgage of c£135k based on £180k value, a five year fix and £900pm rent.

On the purchase, an income of £26k will get you £110k to £115k over 25 years assuming no debt, dependents etc from a lender who will ignore the let as it will be considered self-financing.

That gives you in the region of £245k to play around with for your onward purchase. Don't forget fees and SDLT or equivalent surcharge on top of usual tax.

Grumpy_chap

Typically, a 25% deposit is required for the second property.

Poe79

Thanks for so many quick replies. 
I had never even heard of LTB before this morning and I'm in work so not able to do much research on the subject and it was only that a web search came up with a link to a thread here that I thought I'd ask. 
Essentially I was considering doing the normal thing of just selling up and buying a new home but the idea of keeping this one (which has good future potential) using it to help find another house seems appealing. 
Poe

propertyrental

Do you really want to be a landlord? Do you know what's involved?

Not sure where you are (England? Scotland?) but reading this is a start

Post 7: New landlords (1):advice & information :see links in next post

Post 8: New landlords (2): Essential links for further information

Post 9: Letting agents: how should a landlord select or sack?