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    • BrokenFace
    • By BrokenFace 15th May 18, 3:17 PM
    • 3Posts
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    BrokenFace
    Advice on renting out a home I own and buying a new one to live in
    • #1
    • 15th May 18, 3:17 PM
    Advice on renting out a home I own and buying a new one to live in 15th May 18 at 3:17 PM
    Hi there,

    I have been searching for people in a similar situation and haven't been able to find anything. I inherited a house some years ago and own it outright. Me an my boyfriend want to buy a new house to live in, and rent out the one that I own.

    I have never had a mortgage before, and I am not sure if I need a buy to let mortgage as I am letting out the house that has no morntage and would be living in the one we buy. My partner owns a house with a mortgage on it, and we are living in that house now. But I wanted to know what my options for the future are.

    When we want to move to a bigger house, how can we go about it? We would be selling my partners house to buy the new one, but wanted to keep mine as extra income but don't know what the best mortgage, or what other complications there might be.

    I have read about BTL mortgages but it doesn't seem to quite fit my situation. Also, I am disabled and my only income is from the house I already own and my disability money...so I am not even sure if I can get a mortgage...my partner has a good job and we should be able to offer a 20% deposit on a new house that we buy. My house is worth around 140k and his is worth around 140k. He can currently get a mortgage for a house worth up to 210k. Would we be better just selling mine and getting a BTL on his? Or keeping me out of it all together?

    We spoke to a broker but they were not much use...my partner is self-employed too so I guess that adds another dimension to it!

    Thanks
Page 1
    • AnotherJoe
    • By AnotherJoe 15th May 18, 3:28 PM
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    AnotherJoe
    • #2
    • 15th May 18, 3:28 PM
    • #2
    • 15th May 18, 3:28 PM
    Find a broker that is some use. Was this an independent broker or one working in a estate agent's office? Find another one anyway.

    You would not need a BTL mortage if buying a residential house for you two, you'd just need an ordinary residential mortage. The fact you currentiy own a house you would let out is irrelevant*. Supposed you owned outright a shop instead. would you think you'd need a commercial Mortgage to buy your house ?

    *The only relevance is you might be able to count some of the rental ,income towards your overall income, if you've been letting it for long enough.
    • GoingOn30
    • By GoingOn30 15th May 18, 4:16 PM
    • 83 Posts
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    GoingOn30
    • #3
    • 15th May 18, 4:16 PM
    • #3
    • 15th May 18, 4:16 PM
    If you went on the mortgage I think you'd have to pay the higher rate of stamp duty so that's important to consider.
    • kingstreet
    • By kingstreet 15th May 18, 4:47 PM
    • 33,704 Posts
    • 18,281 Thanks
    kingstreet
    • #4
    • 15th May 18, 4:47 PM
    • #4
    • 15th May 18, 4:47 PM
    If you went on the mortgage I think you'd have to pay the higher rate of stamp duty so that's important to consider.
    Originally posted by GoingOn30
    Property ownership determines SDLT liability not mortgage inclusion.
    I am a mortgage broker. You should note that this site doesn't check my status as a Mortgage Adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice. Please do not send PMs asking for one-to-one-advice, or representation.
    • kingstreet
    • By kingstreet 15th May 18, 4:53 PM
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    kingstreet
    • #5
    • 15th May 18, 4:53 PM
    • #5
    • 15th May 18, 4:53 PM
    The OP creates more questions than answers.

    Do you want to raise money on current property to reduce mortgage on new residence - that's a let to buy? Most landlord wannabees try to borrow as much as they can against their let, usually 75% or the maximum based on the rental income...

    You need a residential mortgage on the house in which you intend to reside. The bigger the deposit (from your LTB remortgage and his sale) the smaller the residential mortgage requirement and the better the rate.

    Frankly, there is nothing here to dismay a decent broker and one can only surmise your broker selection so far has not been well targeted. How did you select the one who was not much use...?
    I am a mortgage broker. You should note that this site doesn't check my status as a Mortgage Adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice. Please do not send PMs asking for one-to-one-advice, or representation.
    • BrokenFace
    • By BrokenFace 15th May 18, 5:29 PM
    • 3 Posts
    • 0 Thanks
    BrokenFace
    • #6
    • 15th May 18, 5:29 PM
    • #6
    • 15th May 18, 5:29 PM
    Thank you for your replies.

    We tried two brokers. One was in an estate agents and he couldn't even offer good advice for being self-employed so then our accountant recommended a specialist broker (my partner is a self-employed contractor so he is in a slightly different position to a normal self-employed person). But our current broker thinks the situation is too complex, and she has been pretty unhelpful for advice regarding my property. I was wondering if it would be better to use my house to raise money for the new house we buy, but then I am guessing the risk is that if we ever couldn't make repayments we could lose my house.

    It was our broker who talked about BTL mortgages...as did our bank when we got mortgage advice. One recommended that we sell the house I own and then put that down as cash to another property that was worth more. But that seemed short sighted to me as it is a source of income. I know they don't take the full rental amount into account when looking at income, but we get 750 PCM rent so that should go some way to helping our monthly payments. And as it stands our broker says my partner can currently borrow a max of 210000 with a 20% deposit. But the house we like is 285. Because my income is just my disability payments and my rental money, my income is quite low. So I wondered if it would be better to put the house I own in my partners name so that he can use it to borrow a higher amount?

    Sorry if I am not giving enough information. Or the right information. It was all relatively easy when my partner got this mortgage as a first time buyer but adding in these other factors seems to throw all the people we have been talking to.

    I know that most people would not recommend putting the house in my partners name but I am ok with that risk. We have been together for a long time and our solicitor said that we could even draw up a private contract that would mean that the house is mine in the event of a breakup. I think I just want to know the best thing to do financially to get the house we want.

    Thank you
    • AnotherJoe
    • By AnotherJoe 15th May 18, 6:05 PM
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    AnotherJoe
    • #7
    • 15th May 18, 6:05 PM
    • #7
    • 15th May 18, 6:05 PM
    A broker isn't going to give advice on whether you should sell or remortgage your existing house to raise capital, because that isn't their job, and they would also open themselves up to all sorts of liabilities.

    You will need to decide how much the house you want will cost . Then you will need to look at how much you can raise(her, a broker can help). Then you need to look at the gap, if any, and determine how to bridge it which might be selling your house, or taking out a LTB (Let to Buy) mortage on it.

    These are lifestyle choices that other people cannot make for you. Only you know how much you are comfortable to spend, if you wish to give up your security of owning an house outright and the income it brings, and so on.

    I think you have been looking ata broker to make the sort of decisions that are your place to make - how much to spend on a house, what size of mortgage you are comfortable with, and so on.
    Last edited by AnotherJoe; 15-05-2018 at 6:07 PM.
    • BrokenFace
    • By BrokenFace 15th May 18, 7:01 PM
    • 3 Posts
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    BrokenFace
    • #8
    • 15th May 18, 7:01 PM
    • #8
    • 15th May 18, 7:01 PM
    Yeah maybe that is it. I thought what I was asking was which direction would be best. And how much of a difference that would make financially. Unless there is a big difference financially I want to keep the house. So other than remortgaging the house I own outright to release funds, is it of any benefit when buying a new house, and does it mean we can get more money because the owned house is capital, or insurance for the mortgage provider? Like is it considered as a plus (other than it's rental income) when we buy the other house?

    Sorry if I am being dense...maybe this is why the broker couldn't help!
    • AnotherJoe
    • By AnotherJoe 15th May 18, 8:27 PM
    • 9,882 Posts
    • 11,038 Thanks
    AnotherJoe
    • #9
    • 15th May 18, 8:27 PM
    • #9
    • 15th May 18, 8:27 PM
    No,its irrelevant when you own a house outright as to what that means you can borrow to buy another (other than, as already discussed, what income you may get from it)

    They aren't interested in it as security, capital or anything like that, what they care about is affordability.
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