Buying another property

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Parazard2

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I am completely clueless about how this works at all so any basic info would be very helpful. I have a mortgage in my own name. I am cohabiting and have 2 kids in creche now (didn't back then). My partner lives with me and is late 40s. We could do with a bigger house... what are our options? Would I have to sell the current house? If I don't (it would rent really well, not much profit to be made from selling it, just clearing of mortgage and taking back deposit etc) how is the current mortgage and prospective rent factored into the calculations?
 
It will all come down to your income. How much are you looking to borrow? Add that and the amount outstanding on the existing mortgage and work out if that is less than 3.5 times your gross income. Some banks will allow a certain portion of post-tax rent on the existing property in the affordability calculations, but you will also face deductions on childcare overheads.

As a second time buyer, you will need to have 20% deposit for the new property in savings also. Your partner being in their late 40's will limit the length or mortgage options available which might stress the affordability calculations.

Parazard2 said:
If I don't (it would rent really well, not much profit to be made from selling it,
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Often not much profit to be made from renting either once all insurance, fees, maintenance and taxes have been paid.
 
For stress testing of existing, would 75% of rental income cover mortgage payment at 7% Interest? (I.e. BTL rate plus 2%).
If not the existing mortgage will factor into the maximum amount you can borrow.
 
RedOnion said:
For stress testing of existing, would 75% of rental income cover mortgage payment at 7% Interest? (I.e. BTL rate plus 2%).
If not the existing mortgage will factor into the maximum amount you can borrow.
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Yes I think so? my mortgage is only about E900 per month and the house would rent for around E1800 if not more - quite easily
 
Is there any way of calculating this the other way around? As in, factoring in combined income, mortgage debt, childcare costs, what would we be able to borrow and for how long? As it stands I wouldn't be even loaned what I was given originally because of childcare (which to me makes no sense given it is a short-term expense, but that is for another thread)
 

Banks will do both a loan to income and affordability calculations, if you don't pass both they would need to grant you an exception. A good broker might guide you on what's possible and how to best frame your circumstances.
 
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