Can i let to buy another home

Ftbftbftb

Hi guys 

Im just after some advice. I currently have 11 years left on my mortgage. I've been over paying my mortgage and reducing the term. 

Currently I have approx 100k left and am due to remortgage in April. Ideally I have Been looking to move but ideally I'd love to buy another home and turn my current home into a buy to let.  My plan is to see how much enquity can be taken out of our current home and used as a deposit on a new one. 

Currently my home is valued around 360k we have a 28% LTV with approx 100k left to pay over 11 years. 


Our current home would give us rent of approx £1250 per month if we was to rent it out.

Is it Also possible to completely remortgage our current home and wpukd the potential rent be used to pay off the new mortgage?

Finally I do know what renting out entails and all the pitfalls of being a landlord.

Many thanks 

MWT

Talk to a broker about a 'let-to-buy' mortgage.

silvercar

Subject to the rental income being enough, with some to spare for maintenance etc, lenders usually consider a max LtV of 70-75%. The downside is that the government have put in tax restrictions on mortgage interest as an expense of the property, so large mortgages can mean a lot of your profit is taxed away.

if you increase the number of properties you own, your new property will have an extra SDLT to pay.

Ftbftbftb

MWT said:

Talk to a broker about a 'let-to-buy' mortgage.

I will but just getting some general advice here first before we go down that route. 

kingstreet

You'll normally need an onward residential purchase transaction at the same time as a LTB.

With rent of £1,250 per month, you'll typically be able to borrow between £170K and £240K depending on the product you select. Lower amount for a two year fix than a five year. Assumes basic rate taxpayer.

caprikid1

To be honest, with interest rates as they are and the cost of the borrowing for the next house and the BTL I would shocked if you get the numbers to work.

House prices are likely to flat for the next few years, interest rates are high and you will get the 3% second home stamp duty.

A BTL Mortgage broker CANNOT advice you on whether is a good or bad investment so you genuinely need to go away and work out the figures.

Just think of the following.

1. Interest is not fully tax deductible so £100-£200 profit will be wiped out.
2. Extra Stamp Duty
3. Electrical Gas Safety tests.
4. Capital Gains tax when you sell
5. Voids (Work on 10-11months occupancy a year).
6. Damage assume your immaculate home will be trashed in 5 years carpets etc.

I did the exact same thing 8 years ago, to be honest  I probably wish I had sold it. I already had 1 BTL so my eyes are wide open.

Typhoon2000

You would be in a better position tax wise if you are able to repay your existing mortgage completely ( even using any deposit earmarked for you next purchase) before getting a let to buy mortgage. This way you would get interest tax relief on the full £360k of borrowing ( rather than a potential £240k and assuming you borrowed at least £120K on your new property). If you are have another loan at a higher interest rate on something else say a car or personal loan, you save even more.

BikingBud

Ftbftbftb said:

Hi guys 

Im just after some advice. I currently have 11 years left on my mortgage. I've been over paying my mortgage and reducing the term. 

Currently I have approx 100k left and am due to remortgage in April. Ideally I have Been looking to move but ideally I'd love to buy another home and turn my current home into a buy to let.  My plan is to see how much enquity can be taken out of our current home and used as a deposit on a new one. 

Currently my home is valued around 360k we have a 28% LTV with approx 100k left to pay over 11 years. 


Our current home would give us rent of approx £1250 per month if we was to rent it out.

Is it Also possible to completely remortgage our current home and wpukd the potential rent be used to pay off the new mortgage?

Finally I do know what renting out entails and all the pitfalls of being a landlord.

Many thanks 

Spend lots of time investigating to address your last statement.

Do not be swayed by historic tales of making pots of gold, that climate has changed.

Be brutally honest and objective, perhaps even pessimistic when you assess the risk and rewards.

Consider easier, less stressful, ways to exploit your income.

Then if you do decide, and come unstuck, you cannot complain that you were not aware.