Buying second property

[Amiselfish9]

Hi there

does converting into buy to let on your first property mean that you can borrow more for a second property? Ie does it free up
borrowing power?

I want to buy a property with my partner but am worried about getting into a chain with selling my first in order to fund the second.

i wouldn’t mind selling mine but just not simultaneously

A buy to let is considered a business. So the rent needs to be a multiple of the mortgage repayment, usually 1.25. If your mortgage repayment at the higher buy to let rate is £500 and your rent is also £500, that would eat into your borrowing power for your principle home.

How much will your mortgage repayment be vs rental income?

Also have you considered additional rate SDLT on the new home purchase?

On the SDLT point raised by @Alcyoneus - you’ll pay additional rate SDLT when you buy the new property, but can reclaim it if you sell the original property within three years.

Any increase in price in the original property is also subject to CGT. Shouldn’t be an issue if you sell the original property within a year of buying the new one though.