We can't sell our current home for 3 years. Can we rent this one out & get a second mortgage?
Posted on 27 January 2015 by Steve
Hi I have a 3 bed house my wife and I brought from the council just coming up to 2 years ago, we have a £120,000 mortgage and the house is valued at £350,000 , it is right on the cross link railway and prices are expected to rise by around 50% in the area in 2 years (I can't see it going that high myself, but who knows). We would like to move from the area and the house we have found is £550,000, I can't sell my house for 3 years as there's a clause in the contract from the council, but went that's up its the same sort of time as the cross rail will be completed, do you think I can get a second mortgage for the new house and keep my existing one and rent that out as we are allowd to rent the property, I can get around £1,800 a month renting it out, thanks. A 36 years of age couple from West drayton London.
Without knowing your exact financial circumstances, I can't say whether what you are looking to do is feasible or not. Certainly in principle, what you are looking to do, which is a Let To Buy is perfectly doable, however, as with many things the devil is in the detail.
Typically most lenders use a combination of overall indebtedness, rental income calculation and loan to value (LTV) to assess how much you could raise on the current property if you should need to. Most lenders cap the the LTV at 75% (£262,500) and this means that the estimated rental income of £1,800 per month, should meet most lenders rental calculations (normally 125% of the monthly payment at a notional rate of 5%). The lender would also need to know how much you would need to know how much you are looking to borrow for the new property, to ensure that you met their criteria for affordability.
If you'd like to talk about your enquiry in more detail, then you can contact one of our consultants on 0344 346 3672 and they'll be able to give you a clearer idea of how we can help you make the move you're looking for.
More than mortgages, talk to me about: Financial Protection | Investments | Personal and Corporate Pensions | Home Insurance General Insurance | Valuations | Conveyancing | Wills | Home finders
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.
YOUR PROPERTY MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON A MORTGAGE OR ANY DEBT SECURED ON IT.
John Charcol is a trading name of John Charcol Limited and its Appointed Representatives. John Charcol Limited is authorised and regulated by the Financial Conduct Authority. The Financial Services Register number is 665649. Registered in England No. 9157892. Registered office address for John Charcol Limited is 5th Floor, Cutlers Exchange, 123 Houndsditch, London, EC3A 7BU. The FCA does not regulate some investment mortgage contracts. Calls may be recorded for training and monitoring.