Can anyone convince me (or rather convince DH) that this isn't workable

[saltire]

We have a house, that we have had for 15 years. it cost us £30,000, and we rent it our for £200 a month. DH wants to - for want of a better word - borrow, or remortgage, not sure what the term is - to buy another house which is up for sale for 75,000 near my mum. SO the toatl will be 30,000 plus the 80,000. He thinks we can borrow the 80,000, add it onto the 30,000 and buy this other house. Then the tennant will still be in our old house, paying the rent which will go towards the mortgage on the 120,00o (still following this?)
Then in a couple of years sell the first house, which is currently valued at 65,000, use the whole amount to reduce the 120,00 and pay off the difference as mortgage.
I don't think this is doable, but he seems to think it will be. Any opinion/advice will be appreciated

It's do-able, but I wouldn't do it in the current economic climate.

if the current house is valued at £65k you won't be able to borrow £80k against it. you already owe £30k on it? or is the extra from soemwhere else?

You can't remortgage one property to buy a new property, it would be new borrowing in it's own right.

So you would want to borrow 100% to buy the new house which is unlikely to happen at the moment, and you would have to pay an HLTV fee as you are borrowing 100% of the value of the house.

And £200 per month rent wouldn't go far towards a £120,000 mortgage even if you could get it - your monthly mortgage repayments would be about quadruple that.

Sorry I can't see how it would work?

Agree it is do-able, but the house near your mums might fall in value in the current climate. I think I'd give it a go and see if you can get 5-10 grand shaved off the one near your mum, which would make it better for you all round. 1st though you have to get another mortagage which might not be so easy at the mo.

be better to sell it and use it as a lump sum for a deposit on a new house surely?

now is not the time to be borrowing huge amounts, if in fact, you can borrow that much

Now I was thinking they were going to re mortage for the deposit on the new property! then get someone into pay the rent/mortgage? non?

You should be able to do it on a buy to let mortgage surely - I'm sure we thought about doing this a couple of years ago (wasn't financially do-able in the end...but that's another story!)

Crikey, is now really the time to be getting in deeper with property? The whole kit and kaboodle is about to go tits up!

If its cheap enough and you can afford it yes its time to buy whilst things are stagnating.

It is not a good idea to invest in an asset which goes up and down like property unless you can afford the good and bad times.property is falling now so best not to invest in the hope of capital gains Also your figures don't look right you might need some independent advice.If you bought the 1st house for 30 and it is now worth 65 then there is only 35 equity in it.

30 + 80 = 110
so you may want to check those figures

If both properties together are worth more than the total you want to borrow then one way or another you will be able to do it. SO if together they are worht £140,000 then theoretically you could raise £110,000 between them

BUT

you may find it difficult to raise the money at the moment, and/or the rate may be high, unless you have excellent incomes that make a loan-to-value of nearly 80% very safe

AND

if you have two properties and sell one then you may be liable for capital gains tax on the profit of the one you sell

AND if you are looking for a relatively quick payback the value of teh properties may go down more than up over the next year or two unless they are wonderfully sellable properties and undervalued at the moment

So it may not be worth doing at the moment.

How on earth do you still owe £30,000 on a house you bought for £30,000 15 years ago?

Or have I misread

Not sure about your figures there

Have you paid any capital off the 30,000 mortgage ?

Are you renting the house out you intend to buy ?

If you want some independant advice my dp a mortgage broker and has an ad on mnet here as others have said getting a mortgage isn't that easy at the moment so it may not be possible.