can't sell! should we remortgage buy-to-let or bridge???

[MissChief]

our house isn't shifting and we're desperate to move into new area.
anyone got experience of either:
1)remortgaging their original house to release equity for new house (and new mortgage) & converting old mortgage to buy to let

2. getting open bridging loan (as we haven't yet sold) - I know these typically have health warnings attached!

Without going into huge detail, we have a high mortgage with around 30% equity in our current house. We also have a relatively high income. Our house would rent out for approx £1800 a month which should cover buy-to-let interest only mortgage payments but possibly not up to 125% as often specified.

any tips? anyone had experience of this?
TIA!

Don't have experience of this but are in a similar position of not having sold. Only thing I would say is if you plan to use an agent to let then take 10-15%(+vat) out of the rental income before you start. Also if it goes unoccupied you'll have to find that money, plus council tax (at 90%), water and utilities.

Hi Lizs - thanks, are you thinking of doing sth similar then or will you wait it out?

Depends if we find somewhere we can't afford to miss. We have rented ours out before but it is a hassle we could do without and we have about 60% equity tied up in it.

We have an ordinary mortgage on our house and got a two-year "agreement" to let it out - might that be an option? Gets you round the 125% thing.

so pruni, have you got 2 "ordinary" mortages then?
sorry, if I'm being thick but thought this wasn't possible?

lizs - if you've got 60% equity it shouldn't be such a gamble to remortage etc should it?

No, just one property which we rent out. We are renting ourselves atm in another part of the country.
We didn't want a buy-to-let mortgage so managed to get an ordinary, then after a while got permission to rent out the property for two years.
Didn't know you couldn't hold two mortgages.

No but it would cost more than we pay at present as we would have to pay a higher rate on a 2nd mortgage. Swings and roundabouts I suspect!

Buy to let will probably be cheaper than bridging - Bridging's typically 1%+ per month where as BTL mortgages are 5.5-6.5% per annum. There are companies now that do 100% of the rental income rather than the 125-130% that others expect (such as Northern Rock). Otherwise, West Bromwich BS ask for 125% but based on their lowest offered rate of 4.75%. West Bromwich and First Active also do something called "top slicing" where provided your income is sufficient, they'll use the rental income and your own income to cover the loans.

hth!

Don't know if still just applies but when I was researching this 1-2 years ago, my mortgage adviser said Intelligent Finance would allow you to run 2 mortgages without insisting on buy-to-let ie they would let the first mortgage run in the background.

Yep blueshoes, there's quite a few will let you do that.. as long as you can "technically" afford both mortgages.

Thanks for clearing that up, Orinoco. Being able to afford 2 mortgages, even "technically", is a big catch though, lol!

what about renting yor house out and then renting somwhere else?

We were all ready to do this when our house sold and we had to be outwithin a month. But we rented for 6 months.

or buying a smaller house that you can eventually rent out when your house has sold and you can move to a bigger one??

thanks -all food for thought. Beetie = you had to be out within a month ? muhst have been a nightmare!

tbh, i was so releived to sell that i didn't mind. we just put most of it in storage and rented for 6 months

IKYWYM - right now I'd happilymove into a tent if it meant we;d sold! Glad it worked out anyway!
will check out diff mortgages now.

moneysupermarket is meant to be good

I was about to post the same as Beetroot wrt renting out yours and renting another place. I was looking into this myself when I lost the first sale of ny old house, luckliy I sold it again quickly but I still ended up in very temp t=renting until this house went through 2m later. Like Beety our stuff went in storage. It puts you in a very good position to buy your next house too once you've sold, you also don't need to worry about moving out/in the same day. Downsides are that it can cost you a bit (but you should be able to argue a better price on your new to cover this being in a such a good position) and you have to move twice. I would do the same again though if it came to it. although I plan to never move again atm!!!!