Leaving the Forces to buy the family a home.

GeorgieB_3

I've just joined the forums and am impressed by the advice being offered by everyone.

I'm due to leave the forces next year (my 22 yr sentence is almost up) and I'm looking to buy a place for my family and I. The wife and I bought a property near Lincoln in 2001 with a view to moving in when I leave the Service. As the family has grown over the years the house is no longer big enough for us all, so we'll need to buy something a bit bigger.

I don't have a morgage on the property and I've been fortunate enough to have had a good tenant in the house for the last couple of years so. I'm reluctant to evict the tenant and am considering keeping the current house rented out. I think the current value of the house is around the 120k mark.

My question to you all really is, what's your best advice for remortgaging on the current house, and will it restrict me getting another mortgage on a house for my family and I. I've certainly no intentions of becoming a property mogul, yet I don't want a mountain of debt. I also want to the best for my tenant too.

I can't seem to find a similar thread unfortunately so any advice or comments would be gratefully received. Many thanks.

clutton_2

you will be able to mortgage the rental property - but i would suggest you contact a "full market" broker and ask their advice as due to the credit crunch, different Lenders now have different criteria in terms of the relationship between the rent/mortgage - they used to insist on 130%. As long as you dont want to borrow too high a % of the value (more than 75%) you should be fine. You could then use these funds as a large deposit on your residential property.

GeorgieB_3

Thanks for that. I figured that with the current rental income I would probably only be allowed to take around 65-70% out of the value anyway.

Am I right in assuming that the rental income will then pay that particular mortgage? Assuming it does, I will then have to take out a residential mortgage for the family property up to the value of whatever house we decide to buy. That will then leave me with two mortgages.

That being the case, if the tenant then decides to move out and I can't find another quickly, am I right to assume I will then have to pay both mortgages?
:eek:

I think my starting point is with one of those brokers you suggested. Thanks again.

PasturesNew

GeorgieB wrote: »

...if the tenant then decides to move out and I can't find another quickly, am I right to assume I will then have to pay both mortgages?

Yes.
And as the first one will be a commercial mortgage/BTL they will be less forgiving if you can't pay ... i.e. they'd repossess you quicker. And then come after your family home to make up the difference.

So don't enter into this lightly.

I won't give you my opinion. OK, you twisted my arm. Prices are dropping. It would be best to sell the house you've got now and wait to buy a family home in 2-3 years' time. If you don't want to turf out the tenant, then simply rent somewhere yourself and watch the market for awhile.

Tassotti

It really depends on your outlook..Do you want to keep the property long term?

To be honest, you should have remortgaged to the max and invested that money where you thought appropriate.

ie The interest paid is tax deductible...you have been paying max tax for that property.

If you keep the property mid-term, you may see it 'decrezse in value', but if you keep it long term, you will be a winner.

Up to you really, speak to an independent financial advsor...Mind you, are any of them rich.....?

GeorgieB_3

Thanks for the advice guys. :T

Having looked at most of the options I'm probably going to sell up and plough all the funds into the family home. I know it's going to be hard on the tenant but I don't like the idea of having a massive debt. My ultimate goal is to become mortgage free and having a smaller mortgage will make it easier in the long term.