Can I get a second mortgage with 10% deposit?

[bombastique]

I have one home in a location where the property prices have not risen but fallen since I bought it and it's difficult to sell.
I now live and work in another city and now rent there. I would like to get permission to rent out the first house and then buy another home in the new city where I now live and work.
If I did the above, would this then mean that I will just need 10% deposit to get the mortgage for second home? Also, what would this mean for paying stamp duty?
Any advice with these any other things to consider would be appreciated. Thank you.

Thank you for the advice.
Something else that I'm not clear about- Would having the first property affect (lower) how much lenders are willing to give to me for second property?

Of course. Because they have to look at worse case.scenarios ie what if there is a period where you have no tenants and have to cover both mortgages.

Also watch out for labour policy on second homes..

And managing tenants! If Labour give even more rights to tenants, occasional landlords will find it more stressful than ever. Many people will tell you not to be a landlord. You also cannot assume you won’t have dead periods with no rental income and you will be paying two lots of maintenance. Financially it’s quite risky.

In addition, the property that’s not your main house would attract CGT when you sell.

Why over complicate your life? Who needs all the stress of being an amateur LL as well as the additional expense of owning 2 properties including having to pay extra stamp duty? It’s a time many landlords seem to be leaving the business because of new legislation & extra costs.

Personally I would just keep reducing the price of your property until you find the price it will sell at. Then buy another property in the place you want to live in.

Agree with @Twiglets1

Sell the first property at whatever you can get for it. It might be (a lot) lower than you want but in the long run I think you'd still be better off financially and emotionally.

There is such a thing as Let to Buy mortgages (not Buy to Let) where you release equity from existing home which you then let to fund purchase of new property which becomes your home. Speak to a broker to see what is currently available.

Of course they will assess your ability to pay both mortgages together. You can usually include rental income, if it's not rented at the time you may be able to use a letter from an agent or property management company saying what rent they expect you to get. This would have to seem reasonable for the area and property type. If there is a high vacancy rate for rentals in your area that may reduce the rental income expected.

Thank you for all the advice. This sounds logical although a difficult decision.
It's a confusing time for me as I sunk quite a bit of money into doing up my house and the value has fallen rather than risen so I will be at an even significant loss.

I understand that is hard psychologically.

But I still think it sounds like you will be better off in the long term just accepting you have lost money on that property and moving onto the next phase of your life. I’ve lost money on property too in the past so I know it’s upsetting at the time but it happens.

So keep the house and rent in the new city

Natwest will lend you on second residential with 10% deposit as long as both are affordable, that means that the bank will want to see if you can afford to pay both mortgages at the same time, unless you do a let to buy which would essentially convert your current house into a buy to let and let you buy the second residential property, permitting that you have enough equity or deposit to build equity.

I don't agree with the comments above, selling your property sounds like an ill financial decision, especially because of the value. Yes, becoming a landlord is risky and has its drawbacks but no one ever got anywhere without stress or hard work. Think more long term and your future self will thank you.

I'm inclined to agree.

Last year, I had to sell my property at a loss too so we could move to where we were working. We considered keeping it until the redress scheme was sorted properly, but as we wouldn't be there to keep an eye on any deterioration, we decided it would be safer just to let it go. We have less deposit now, so have been renting for longer and 6 months after completion we still haven't found a new place that works for our family as the property market is so slow and so few new houses are coming up atm. I also suggest persevering with selling it, at least then you're drawing a line under it and just moving on. And from experience, managing a rental from a different city is hellish.

If you've a mortgage payment on the first house, you're unlikely to pass affordability for the second house as well with the current situation with banks. They're very risk averse right now.

They would be as long as affordable. OP mentions 'permission to rent' which I assume refers to consent to let on a residential mortgage. Can do that until enough equity is built and switch to BTL, which is available with as low as 15% deposit, albeit with high interest rates.

They would be as long as affordable. OP mentions 'permission to rent' which I assume refers to consent to let on a residential mortgage. Can do that until enough equity is built and switch to BTL, which is available with as low as 15% deposit, albeit with high interest rates.

For clarity, I'm not currently letting out my mortgaged home. I go back there about once a month. So I'm currently paying mortgage there and rent elsewhere.