How can I rent out my existing property and afford to buy a new one?

Posted on 26 March 2008

I currently own a property valued at £300,000 (with o/s mortgage of £170,000). I would like to move but want to rent out my current property in lieu of selling it. Based on a monthly rental value of £900 on my existing property and a current salary of £120,000pa how could I finance this and what value mortgage would I be able to get for my new property.

Hi Paul,

Lenders all offer different levels of generosity with regards to calculating the loan amount from the rental income, but roughly speaking you're looking at £170,000 on £900 rent. You would just do a buy-to-let remortgage on this.  I would have your broker search for a lender that could go to more, so that you could take some equity as the deposit for your new home.

For the new residential mortgage on a new home, £120,000 salary would allow you to borrow around £500,000, but your problem will be the deposit, there are a mere handful of lenders that do 95% mortgages now,  most go no further than 90%, so expect to need 10% deposit.   For a whole of market, fees free broker to help you, please call 0800 358 55 60.

Regards

 

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