Mortgages: Change of purpose of house from residence to letting

In I am considering moving house next August. I currently have a 90% mortgage (original house price 110k (100%)). My 3 year residential fixed rate mortgage comes to an end early next August.

At this point I want to buy another house for myself and my family to live in. I want to know how realistic it would be to hold onto my original property and let it out? What impact would doing this have on the purchase of the new house and implications on obtaining a mortgage on the new property.

Specifically:

  1. Is the scenario I describe a normal one?
  2. Would the buy-to-let mortgage I would obtain on the original property be self-financing, and therefore not impact on my residential mortgage application? i.e. the value of the property and rental income would be considered the security for the mortgage.
  3. I believe the original property has increased in value by between 20 and 40k, could this increase in value be used to obtain a more competitive buy-to-let mortgage (say 75-85%)
  4. Alternatively, could an increase in value of the original property be released to aid me in the purchase of my new residential property?
  5. Are there other pitfalls/benefits I should be taking into consideration before embarking on this? Big question I know!

PK

Reply to
PK
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Worst case scenario here - could you afford comfortably both mortgage payments for your old house and new one? Problems could arise if tenants refuse to pay, won't pay or if you cannot find anyone to rent from you or worse still they damage your property and do a runner. If the mortgage payments can be met then go for it if it is what you want.

Reply to
Eric Jones

Depending upon how you define 'normal', yes it's a normal scenario.

I don't know. What rental could the property achieve? You have to work this out for yourself

Yes.

More competitive in the sense that you will get one at all yes, but not in the sense of it being much cheaper.

90% BTL mortgages are not common.

Probably not, given the amount that you are suggesting.

You need to be sure that the answer to Q2 is yes.

tim

Reply to
tim (moved to sweden)

Q. In I am considering moving house next August. I currently have a

90% mortgage (original house price 110k (100%)). My 3 year residential fixed rate mortgage comes to an end early next August. At this point I want to buy another house for myself and my family to live in. I want to know how realistic it would be to hold onto my original property and let it out? What impact would doing this have on the purchase of the new house and implications on obtaining a mortgage on the new property. Specifically:
  1. Is the scenario I describe a normal one?
  2. Would the buy-to-let mortgage I would obtain on the original property be self-financing, and therefore not impact on my residential

mortgage application? i.e. the value of the property and rental income would be considered the security for the mortgage.

  1. I believe the original property has increased in value by between 20

and 40k, could this increase in value be used to obtain a more competitive buy-to-let mortgage (say 75-85%)

  1. Alternatively, could an increase in value of the original property be released to aid me in the purchase of my new residential property?
  2. Are there other pitfalls/benefits I should be taking into consideration before embarking on this? Big question I know!

A. Worst case scenario here - could you afford comfortably both mortgage payments for your old house and new one? Problems could arise if tenants refuse to pay, won't pay or if you cannot find anyone to rent from you or worse still they damage your property and do a runner. If the mortgage payments can be met then go for it if it is what you want

Reply to
Mac

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