@Grace212
Having been in a similar situation, although with a job, we found that brokers struggled to recommend products for us, and we ended up going about things a different way.
The main issue was that without renting the property out first, it has no rental history. You have no proof of how it would let/ cover costs. So you have no proof of that as your income either. Second issue is that it thoroughly restricts the market for mortgages if you are trying to release equity on a property that you are living in for anything other than home improvements.
We ended up moving into rented for a year, and renting our property out (we got a consent to let from my mortgage provider, which you wouldn't need). It's a year where in effect your rent is offset, as mortgage would be £0, income would be £xx in rent ,(less tax), rent payable would, I assume, be lower than that income received.
When you have moved out, the options are:
That you could set up a ltd co property business, with you as the owner, and 'sell' the property to the business. You personally wouldn't actually be receiving the money from the sale there and then, but the company would owe you xx in directors loans. You can then receive an income every year of whatever you choose, which of course is taxable, and use that as your income for a new mortgage on a new property personally. You could either just take a regular wage each year, or the company could remortgage the property to repay your directors loans, and buy a property from that.
Stamp duty would be payable on the old property at the point of transfer of equity, but you would be free to buy again personally without incurring more stamp duty. Downsides are that if this was to be your only income, lenders would probably want to see a good couple of years of your accounts/ salary before lending, accounts would need to be filed yearly, and even if you sold this property, stamp duty wouldn't be repayable. Positives are that there is a clear separation between you and the property, and income generated would be classed as profitable to your business. Better if you plan more BTL in the future.
Second option, again move out and rent, but keep hold of the property personally. Rent it out for a year, register as self employed and make sure you file a self assessment showing the profit (again, taxable as income). You can spend as much or little as you wish of this income, is it yours. When you have this, approach brokers about remortgaging it on a BTL mortgage and releasing equity. You can then release equity up to 75% of the property's value, on either a repayment or interest only repayments, for your own use, as long as the rent covers 145% of the mortgage costs, and use this to buy your own home outright. Speak to a solicitor, but there may be a possibility that you won't have to pay the higher rate of stamp duty when buying your new one, as you haven't lived there for a year so it wouldn't be your main residence any longer. Negatives are: no seperation from the business to you, depending on how much income is brought in you may end up on a higher tax rate, income tax can often work out better through a limited co than self assessment because of the rules of what you can charge as a cost. Benefits are that all profit is yours to do as you see fit, stamp duty could be lower, can go for new mortgage in 1 year rather than 2-3.
We went for option 2, although we have only released enough for a deposit on a new property.
Owned house on a mortgage, moved into rented (new area), and got consent to let. Rented out for just over a year.
Remortgaged original house on a BTL mortgage, released equity, was complete within a month and money in the bank, now on interest only. Was able to prove rental income.
Currently using that money as a deposit for joint house with DP, solicitor thinks that we are eligible for lower rate stamp duty as no longer main residence.
Please note that all of this above has been purely from my own research, and not proper advice! But I found that lots of brokers were fine if residential purchase, fine if BTL purchase, but struggled to advise on mixtures of the two and how to do it. It needs imagination!
But if you think you want to sell definitely within a year or 2, then save yourself the hassle and just sell. It's REALLY not worth the hassle of being a landlord, sorting out self assessments and remortgaging for the sake of a year.