Advice required please

odb_2

Hello

I have a question regarding my next property move. December 2005 I bought a flat for £135k, using £25k deposit and the rest on a 40 year (I had to at the time due to wage restrictions and only being 23 but needing a place) deal at a very good 4.24% fixed for 3 years! The property is probably now worth around £150k, and when the mortgage fixed period ends this December I’m thinking of buying a place with my girlfriend.

My question is is there a way I can keep my current property? Ideally I’d like to rent it out as it should fetch around £650-700 a month. However how would this work, would I need to re-mortgage this property on a ‘buy to let’ and then get another mortage with the girlfriend on the second property? How would it affect us with what we can borrow for the 2nd place? Current joint income would be around £55k and we would probably have a small deposit for the next place too.

As long as the second property pays for itself then I’d like to keep it as a long term investment as I believe it will go up a lot in valve over the next 10 years.

Any advice would be greatly appreciated.

Thanks

Mr_helpful

odb wrote: »

Hello

I have a question regarding my next property move. December 2005 I bought a flat for £135k, using £25k deposit and the rest on a 40 year (I had to at the time due to wage restrictions and only being 23 but needing a place) deal at a very good 4.24% fixed for 3 years! The property is probably now worth around £150k, and when the mortgage fixed period ends this December I’m thinking of buying a place with my girlfriend.

My question is is there a way I can keep my current property? Ideally I’d like to rent it out as it should fetch around £650-700 a month. However how would this work, would I need to re-mortgage this property on a ‘buy to let’ and then get another mortage with the girlfriend on the second property? How would it affect us with what we can borrow for the 2nd place? Current joint income would be around £55k and we would probably have a small deposit for the next place too.

As long as the second property pays for itself then I’d like to keep it as a long term investment as I believe it will go up a lot in valve over the next 10 years.

Any advice would be greatly appreciated.

Thanks

What you are after is called a let to buy. You keep existing mortgage and convert it to a buy to let mortgage. This might be a remortgage or just asking permission from current lender. You then buy new property with girlfriend as if you didnt have a mortgage just as if you were first time buyers

odb_2

Thank you, thats very helpful and good to know.

odb_2

One more thing sorry - would I have to pay tax on the rent I'd be getting? The mortgage would be around £570 but I think the rent would come in close to £700.

homer_j_3

Yes there will be tax issues that you will need to know about. Mortgage Advisers are not able to discuss these with you and will recommend that you consult a tax specialist that is qualified to give this information.

You could always look on some landlord websites and the information will be on there and on HMRC website too.

odb_2

'doh'

Thank you.

UK007BullDog

You also need a deposit for your new property as no chance of remortgaging your old property to release equity. Those days are gone and no 100% mortgages either anymore.

odb_2

Yeah but if I can get a 95% mortgage on the 2nd place then thats ok. I think long term it could work out very well.....just as long as I can actually sort it. Will sit on it for a few months and see what happens with the market.

UK007BullDog

Well I hope you and your partner have excellent credit records, no other debts and good incomes to get the 95%.

odb_2

Yes, yes & yes.

Still - will see how the martket goes over the next few months.

Thanks for all the replies- much appreciated all.