Posted on 21 March 2011 by Robin

I am currently in a house that is worth £175k with a mortgage of £44k. I would like to use the equity in this house to move to a bigger house and use the first house as an investment. Would it be best to try and release as much equity from my current house and then have a larger mortgage at my next or is it better to balance out the risk? I'm looking at purchasing a house of £200k.


I think that you will find it better to split the risk across both properties so that you have a reasonable amount of equity in each one. Not only does this provide you with a cushion against future falls in property values, but would also mean that you would have access to a wider range of both residential and Buy to Let (BTL) mortgage products.

The actual amount on each will largely depend on the rental income you can expect to receive. The rent will need to cover the mortgage payments by between 120-130% depending on the lender. For instance a mortgage payment of £100 would need to be covered by rental income of £120-£130.

I recommend that you get at least 3 different rental assessments from local agents and then give us a call on 0344 346 3672 and tell the consultant the date and title of your question. They will be able to look at the options available 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.

We recommend you seek professional advice with regard to any of these topics where appropriate.

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