How can i rent out my existing mortgaged home to enable me to buy another property?

by , 19 Aug 2010

I want to purchase a slightly bigger home and develop the property as i have now completed the one I live in.

Answers

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the way things are at the moment more people are renting these days i would put an advert in your local press , also shops and so on this is asuming you want to rent private, otherwise you can go to estate agents who do letting be aware they do charge fees.

by smartcar, 19 Aug 2010

You will need to get a buy to let mortgage for your current house and make sure that you have the relevant insurance etc. You will also need to arrange a mortgage for the property you intend to buy and make sure that you have the funds for this as well as covering the property to be rented (allowing for it to be empty, you never know).

Have you researched the rental prices in your area? DO you think it will be financially viable?

by MarkX, 19 Aug 2010

No, you don't need to get a buy to let mortgage on your current house. You just need to let your mortgage provider know that you are going to be renting it out.
Getting a mortgage on the new house may be more problematical but it can be done. You are probably best getting some advice about this from the mortgage companies. Some places did a rent to buy mortgage for just such a situation as you are in but I don't know whether any are still around in the current climate.

by roseangel, 19 Aug 2010
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You must contact your mortgage company, you are likely to be on a standard residential mortgage so you need permission from your lender to let the property out, there may charge an admin fee for this usually max ?100. They may require to see the AST contract before signing it off.

You will also need to notify the buildings insurance that you are letting the property out although you do not need there permission.

It is worth considering taking out landlord insurance to protect your items, even the carpets and window dressings.

Get 3 valuations from different agents and check out the options of fully managed versus tenant find, be aware of all the rules and reg's if you are going it alone: Gas Safe cert, TDS, AST contract, PAT testing to name a few items to be aware of.

by Member-4345, 19 Aug 2010

I'm quite fortunate that my older brother has a rental property, so I was aware of the certs etc and I know that they are the most important part now and obviously cost too!

by darry, 23 Aug 2010
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Don't forget that you can get tax relief on the interest you pay on the loan for the property you rent out which you cannot get on the property you will buy for your own residence. So it pays you to have the largest loan possible on that property.

by Susancrane, 19 Aug 2010

Thanks for this, I'm assuming that because a rental property is treated as business?

by darry, 23 Aug 2010
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Also the lender will look at the LTV rate before providing you with a buy to let mortgage so it depends how much equity you think you have in your current property. The Woolwich are offering a good one but will only lend you up to 60% of the property's value.

by frenchwoodgirl, 19 Aug 2010

The answer to the question is different to the answer posed by your additional remarks.If you have equity in your main home then you can remortgage (you will know if there are penalties). That will release cash to put towards your buy to let mortgage for the second property assuming that you don't have a full deposit for the B2L mortgage. The problem arises if you are buying a property that requires work. It is still possibly but the B2L is dependent on two things. Lenders want evidence that you can pay both mortgages. The rent will cover the B2L presumbaly once completed. The remortgage depends on your salary. Secondly you will require funds to help you over the cash flow issue. The lender of the B2L will retain money until certain works are completed. You must be careful not to over extend yourself in a market where rates may rise. Do a budget that includes living on thin air whilst work is undertaken and allow 6 months.

by pmscot93, 19 Aug 2010

Yes, this is excellent advice.

by roseangel, 19 Aug 2010

Great advice, just thrown this out there to you guys and you are giving what I believe is sound advice, just considering it at the moment and I know the market is up and down at the moment, but it's food for thought at present and when the time is right I will follow ur advice. We should have some good equity in a year or so, looking at researching it before we make the step, just going to take a break from is all, get xmas out the way and then start to really look into it. Hopefully when we do make the move the market will have made it's mind up!

by darry, 23 Aug 2010
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i would advise a rental agency as they will deal with it all. however beware the likely housing market crash as you may end up in negative equity on both houses. also you need premission from your mortgage company to sublet.

by katkity, 20 Aug 2010

On a standard residential mortgage, you have to take permission from your lender to let the property out.

by amelia22, 28 Dec 2012

You should contact your mortgage company or get a buy to let mortgage for your current house. On a standard residential mortgage, you have to take permission from your lender to let the property out.

You will also need to arrange a mortgage for the property you intend to buy and make sure that you have the funds for this as well. For buying new property you should be aware of the latest market prices in your local area. You can conduct a search for latest property prices at Google, where you will get a detailed list including sites like Plaza Estates who give you full information about properties for sale as well as rentals in London.

by amelia22, 28 Dec 2012

Posts within the money.co.uk community represent the views, experiences and opinions of members and experts only. They should not be taken as financial advice and should not be followed without further research.

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