Posted on 1 February 2012 by Joanne
We currently own a 2 bedroom property and are unsure what to do with it... we purchased the house in 2007 on a NR together mortgage. We have 64k outstanding on the mortgage and have 18k as the unsecured loan tied to the mortgage. the property is currently worth approx 75k-80k, we would like to move to a larger property and have approx 10% saved for a deposit. what would be best to do? sell the property and take the loss or try to get a consent to let (would this be difficult) and purchase another house with the savings. we have no other debts and unsure if the house will sell in this climate.
In the past Northern Rock would have let you sell the property, redeem the mortgage and then let you carry on the unsecured loan. The interest rate on the unsecured loan would increase by 8% to bring it more in line with other unsecured loans on the market.
Trying to get information from NRAM has been like trying to draw blood from a stone, but they will let you move your existing mortgage and unsecured loan to a new property so long as you do not wish to increase the amount you wish to borrow. I regret that I have been unable to find out if they will let you let the property, but I very much doubt it. You should call their customer helpline on 0845 609 9610 to clarify this.
If you are able to let the property, you should speak to several local estate agents about the letting market and how easy it would be to let your property. You may find that the rental income you receive would not be enough to cover your existing mortgage and loan payments, yet alone allow you to build up a reserve to cover the inevitable additional maintenance costs letting a property brings. To give you an idea, Northern Rock look for your monthly rental to be 130% higher than your monthly payments would be using an interest rate of 6%.
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