Let to Buy with no Equity

Posted on 1 June 2010 by Maureen


My partner and I are joint names on current mortgage for £132k with no positive equity due to current market. My question is if my lender agrees coulw we rent out this property and obtain a 2nd mortgage for approx £125k, we earn combined approx £50k and will have approx 25k deposit. We have found a home we love and could live in for a long time.

Maureen

I think this all hinges on whether or not your current Lender will grant you permission to let. If you put yourself in their position they currently have a mortgage being paid by a couple whose income easily covers the monthly repayments. The property is occupied by people who care for it and have invested a lot of their lives in it. Do you agree to them moving out and being replaced by people who won't care so much, at a time when there is no leeway to cover additional costs if the mortgage ceases to be paid? I think you will be fortunate if they do agree to the letting.

Being a bit more positive, once you have you current Lender's agreement I don't think you will have to much trouble finding a Lender to consider your new mortgage. The choice will be restricted, but you have a decent deposit to put down and there are more mortgage products about now at the Loan to Value (83%) you will be looking at.

Once you have heard from your existing Lender I recommend that you speak to an independent mortgage broker about sourcing the new mortgage.

Peter

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