Posted on 21 February 2011 by Stephanie
Our mortgage is 180k our house is worth £600k. We want to let it out and buy a new property to live in worth around £120k. My husband salary is 92k so could we borrow up to 3.5 times that which leaves us £120k to buy a new house. Would it be best to keep our current property, rent it out and could I put the whole mortgage on that property without selling it so I could benefit from the interest being deducted from the earnings we get from rent which would be about £1800k per month. Or would I need to get a new mortgage for both properties one a buy to let and one a new mortgage with a deposit?
If you are thinking of letting your house on a permanent basis then you will need to switch to a Buy to Let mortgage, your existing mortgage lender will usually only give consent to let if you intend to move back in the foreseeable future. It would be worth asking your lender what their stance is because your current interest rate is very likely to be cheaper than you will get on a Buy to Let.
Either way you will need a residential mortgage on the new property and lenders will want to see either consent to let from your existing lender or an offer of mortgage for a BTL. Once they have seen this they will be able to ignore you existing mortgage debt and you will be able to borrow more than £120k based on your husband's salary if you so wish.
Regardless of how much you borrow, you will need a deposit for the new property. I would recommend putting down at least 25% to get the benefit of cheaper rates if you can. Unless you have the money saved this will probably mean borrowing more against you current property, the exact amount you can raise will depend on the anticipated rental income covering around 130% of the monthly mortgage payment.
I believe you would benefit from speaking to one of our independent mortgage advisers. Please call on 0344 346 3672 and tell the consultant the date of your question, they will be able to look at your situation and advise you accordingly .
Answers provided in response to Ask the experts are based on the information provided and do not constitute advice under the Financial Services & Markets Act. They reflect the personal views of the authors and do not necessarily represent the views, positions, strategies or opinions of John Charcol. All comments are made in good faith, and John Charcol will not accept liability for them.
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