Let to Buy

Posted on 4 August 2011 by Laurey


We are currently have a 120k mortgage left on our house (which costs 750 per month) and would like to rent that out. We could rent it out for 500/550 per month. In addition we would like to buy a house for 215k with a 25k deposit (giving us a mortgage of 190k). My partner earns a basic of 40k and I earn 16k. Is this possible for us to do this please?

Laurey

Based on the figures you have provided, I do no think that it will be possible for you to let your existing property and buy a new residential house.

When looking at affordability lenders will take into account both the mortgage debts, in your instance £310,000 and look for your earned income to cover the whole amount.  They can disregard the mortgage on the let property if the rental income covers the mortgage payments by at least 125%, unfortunately the rent you have stated is less than the mortgage payment and does not leave you with extra funds with which to build up a reserve to cover periods where the property is not let, maintenance, insurance, rates or any unexpected outgoings.

If you wish to move, I think that you will need to sell the existing property and use the equity from that to increase your deposit.  I believe we can help you and that you would benefit from speaking to one of our independent mortgage advisers.  Please call 0344 346 3672 and tell the consultant the date and title of your question, they will then be able to offer further advice on your situation.

Peter

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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