Can I use my property to buy another one?

[ohbob]

My aquaintance told me she kept her house and used a broker to help her get another one without having to sell her first property. She rents it now with a buy to let mortgage.She said maybe I could look into doing that instead of selling mine.

When is it better to do this instead of sell? How do you go about doing that and wag at does it entail.

Do you currently have a mortgage on it? You need substantial equity in the first property to remortgage and a decent deposit for a btl mortgage. There is also higher rate of Stamp Duty on a second property.

Similar to you I want to keep hold of it as I don't think it's a great time to sell my type of property. However it would be very easy to rent I think. Stress test for 2 sets of bills etc I'm not sure I would pass them checks as I'm not a massively high earner.

There's no mortgage on it.

We done this last year seen an old cottage i fell in love with which was in the sticks. Had a house with 17, 000 mortgage left .New house cost 220, current house was valued at 220. We were not proceedable buyers so only way we could make ourselves proceedable was to put our house up for rent which made us immediately proceedable.. Also didnt know if we were going like the house we went for as it was so different. We had a large amount of equity so this was put forward as deposit. Decided to sell old house after 1 year and love our new house. Without a financial advisor I would never have though of doing this. Good luck

No Hannah not at all. I'm really grateful for your advice. I don't think I earn enough maybe. The thing is I have a flat with a garden and that's why I thought it may be better to keep it for now.

Thank you Wildasthewind. Yes I was given my friends broker who explained it all to her. The thing is I think she did it with her husband whereas I would like to do it alone

Has any one else got experience of doing this

?

Yes.
I bought a house, had a decent amount of equity in it.
We moved out of the house and rented somewhere privately. I then rented out my old house on a consent to let while staying on a residential mortgage.
A year later, I remortgaged as a buy to let, this way I had a record of the rental income, and released the equity up to 75% ltv

I used the equity as a deposit for a new home with my partner. Because I had a rental history, the other house wasn't included in my affordability checks, and we actually only paid the lower stamp duty as the rental wasn't classed as having two main residences. It also put us in a strong buying position as chain free.

So, my advice would be, do it, but rent for 6 months yourself. It gives your rental a chance to give you a rental history.

Wry interesting Anon, I am actually already renting in the area I want to live in.

That's good that they don't treat it as a main residence if you do it that way. Did your broker tell you that at the time?

@ohbob no, it was the solicitor, when they went through the checklist. It was a bit more complicated for us, as my partner also had a property that he sold within 3 years, so we paid and claimed it back.

Yes, I'm currently in the process of doing this. The numbers are very tight though and it's terrifying going from a small mortgage to 2 absolutely huge mortgages. And one is interest only, so I still have to find money yo pay it off.

But it's worth doing if the new residential property has space for lodgers if everything goes wrong. Otherwise there's a lot riding on keeping your job.

Thank you for telling me your experience OneTwoThree - on top of all that being a landlord too. Good luck with it all xx