I’m going to contact a financial advisor to go through all of this properly in the new year but want to have some thoughts and understanding before I go to an appointment.
We have two properties both with mortgages. One is our old house which we now let out and we live in the other. We are lucky enough to now have come into a sum of money that we’d like to use to help us move to a more suitable family home.
My question is - do we pay off the let-to-by mortgage, thereby giving us an income that would enable us to afford a greater mortgage on a new property? Or continue to have two mortgages, putting the cash sum towards the purchase of a new home.
The other factor is that the mortgage on the rented property is currently an interest only mortgage which we would look to move to repayment but will be obviously a greater monthly expense than it is now.
My instinct would be to pay off the smaller mortgage as it feels less complicated then we’ve only the one commitment. But I don’t know if there are advantages to having our ‘debt’ spread across two sources or importantly, whether the mortgage lender for a new home would consider rent from a mortgage-free property as a source of income on which to base a mortgage?
Thank you if you’ve followed me this far! Any thoughts appreciated.