Here's our situation... advice please!

jeffh2007

My wife and I own outright our 1 bed flat in Brighton, valued at £190k. No mortgage. In 2 years time we'd like to move to a house. By then our cash savings will have reached £95k. My wife and I each earn £30k pa (though that's with both of us working full time, which wouldn't be the case if wife went part time).

Ideally, when we move, we'd like to keep the flat on and rent it out.

What price house could we aim for? Would we need to take out 2 mortgages (a landlord mortgage on the flat and another one for the difference)? Want sort of size repayments would we be facing?

Thanks for any tips!

Jeff

beingjdc

If house prices don't change significantly in that time period, then it depends what the flat would rent out for - BTL mortgages tend to be done on rental cover. Let's imagine it rents out for enough to mortgage it for £150k. Add your cash savings of £95k is 245k. Assume a 3.5x mortgage on joint income and that brings us to a ceiling price for your house purchase of £455k - but you probably want to keep some savings, and you'll need a bit of that for tax, legal and moving costs.

I imagine lending rates will remain around the 6% mark in the medium term wherever the Bank of England goes, but that could be wildly out in either direction. That would leave you with total repayments of £1800 interest only, or £2320 on a 25-year repayment. Subtract from that your net rental income, and there's your answer. Don't forget to include in your maths the loss of the £500 a month you should by then be making in interest on your savings.

UK007BullDog

Its all hypothetically because we do not know what will be:

1. House prices
2. Mortgage rates
3. rental returns
4. your employment status.

Save up like crazy to bolster your savings and come back and ask the same question in 2 years time. We then would need to know property prices, rental you can get conservently(spl) (work on the lowest quote), income before tax, savings and ages.