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buy to let on first home - possible?

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  • 19-07-2009 10:26pm
    #1
    dizms
    Closed Accounts Posts: 8 ✭


    Hi,

    Just wondering if anyone is currently renting out their first property and have successfully got a mortgage for a second.

    We are looking to move out from our 3 bed semi, the rental market in the area is good and would cover the mortgage payments on that house.

    Is this even possible in the current climate?? Otherwise I am afraid that we will never be able to move on : (

    D


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    #2
    BankMan
    Closed Accounts Posts: 143 ✭✭BankMan


    In order for that to work, the rent on the first property would need to be probably 1.5 / 2 times the interest on the mortgage loan, otherwise the amount you can borrow for the second property will be reduced.


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    #3
    dizms
    Closed Accounts Posts: 8 ✭dizms


    Thanks for the reply Bankman.

    Can you explain that to me in real terms if thats possible - if current mortgage on property 1 is under 800 a month, balance of 190,000 on house. Have been told rental market will cover the 800.

    Want to have mortgage of 350,00 for second property.

    Diz


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    #4
    BankMan
    Closed Accounts Posts: 143 ✭✭BankMan


    dizms wrote: »
    Thanks for the reply Bankman.

    Can you explain that to me in real terms if thats possible - if current mortgage on property 1 is under 800 a month, balance of 190,000 on house. Have been told rental market will cover the 800.

    Want to have mortgage of 350,00 for second property.

    Diz


    No probs. Mortgage of 190k, interest only repayments would be €633 (assuming 4% interest rate). Rental income would need to be €950 (if 1.5x is the calculation) or €1,266 (if 2x is the calculation). If you're getting €800 rent, the difference will be taken off your monthly income when calculating what you can borrow on the next home. If 1.5 is the calculation, and you need €950 in rent, they would treat it as if you have a personal loan costing €150 per month.

    I should stress that different lenders have different ways of calculating this, but I'm just using a typical method. Approach a few lenders and you'll soon find out. Best of luck.


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    #5
    dizms
    Closed Accounts Posts: 8 ✭dizms


    Thanks Bankman - at least that means I have some idea what is involved when I go talk to brokers. Things being as they are I think we might be stuck with current property for awhile so this could be a great option.

    Thanks for your help. I appreciate it,

    Diz


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    #6
    BankMan
    Closed Accounts Posts: 143 ✭✭BankMan


    No worries, hope it works out for you


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    #7
    faceman
    Moderators, Category Moderators, Arts Moderators, Entertainment Moderators, Social & Fun Moderators Posts: 16,603 CMod ✭✭✭✭faceman


    Dont forget OP, that if you rent out your first home within 2 years of the purchase date, you are liable to pay stamp duty.


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