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Letting out our house so we can buy another

(8 Posts)
nikos Thu 21-Jul-11 14:13:07

We are desperate to move and have a fair bit of equity. But there are no buyers around we are looking into renting ours out so we can buy somewhere else. Does anyone have recent experience of this and how mortgage lenders handle this nowadays?

countydurhamlass Thu 21-Jul-11 21:07:22

we are in the same position. i have spoken to our mortgage company Santander who are willing to give us a mortgage for a new property (although they do take into account your current mortgage liability) and to rent our house out we have to apply to them in writing enclosing a cheque for their fee of £300 which if they say no we get it back. they have told us everything will stay the same with out mortgage, ie we dont need to go on to another mortgage rate or anything. we have someone to rent our house, we are now just in the process of looking for a huot for us to move into.

countydurhamlass Thu 21-Jul-11 21:08:23

forgot to say that we still have to put at least 10% down for our new property and they will not let us borrow it against our new property if we are going to rent it!

biffandchip Thu 21-Jul-11 21:16:03

I did this last year (and have done it before). Re-mortgage your current property with a buy-to-let mortgage, releasing the equity (hence a larger mortgage) as a deposit on the new house you want to live in. It's ok to have different mortgage providers for each property. See a financial adviser, there are some really low interest rates if you have a decent deposit.

SkelleyBones Thu 21-Jul-11 21:34:35

We nearly did this but for the fact that any voids we'd have been up the creek, does your monthly income allow for the rental to be sat empty at all or the boiler to go ?

nikos Fri 22-Jul-11 08:02:52

Thanks everyone, will do a bit of number crunching today. Northern rock say we can keep our current mortgage but think we would be better to change to buy to let as we are tied into a high rate with northern rock. It's not ideal, have rented our a family size home before and there always needs to be some repairs going on. But just so fed up of the dead Market at the moment and having our lives on hold.

nikos Fri 22-Jul-11 08:31:05

For those of you who took out a buy to let mortgage, does your household income have to cover both the borrowing on the rented house and the new house. just wondering if this might limit the borrowing we can do even though we have a lot of equity.

SkelleyBones Fri 22-Jul-11 09:31:06

The rent has to cover 125% of the BTL mortgage and then there was an affordability calculation done on the incomes, so they took off childcare, other debts etc.
Think carefully about the voids and the repairs is my advice, we have been accidental landlords before and it's no fun going without essentials in order to pay for your tenants to be comfortable immediately, which you have to do but it's still tough.

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