# I want to rent out my current home and buy a second with my girlfriend

Do the sums work to allow me to become a buy-to-let landlord?

Q I'm thinking of renting out my home and buying a second house in the near future. My current house is worth around £105,000, the mortgage is £82,000 and I think I could get around £475 a month in rent for it. I'm looking to buy a second property with my girlfriend for around £150,000. I earn £30,000 a year and she earns £17,000 a year. MW

A Your plan to rent out your house while buying another property with your girlfriend seems to work – but only up to a point. Because you don't need to borrow more than 80% of the value of the property you could convert your current mortgage to a buy-to-let mortgage. If you wanted to borrow more than 80% of the value of your property, buy-to-let would not be an option because 80% is the most a buy-to-let lender will lend.

Assuming you went for an interest-only buy-to-let mortgage at the cheapest rate you could get for borrowing 80% of the property's value, currently 5%, your monthly mortgage payments would be £340. The rent of £475 would cover the mortgage payment by more than the 125% required by most buy-to-let lenders, which makes a buy-to-let mortgage look feasible in your case.

However, a buy-to-let lender won't take your word for it that you will get rent of £475 a month; it will get a professional valuation on the rent your property could achieve. If the professional's figure is less than the £425 needed to cover the mortgage payment by 125%, your application for a buy-to-let mortgage would probably be turned down.

The real problems start with your plan to buy a house for £150,000 with your girlfriend. On paper, if you could borrow a not-unheard-of 3.25 times your joint earnings of £47,000, you could get a mortgage of £152,750. But you are unlikely to be able to do so because no mortgage lender these days is prepared to lend the full amount of the price of a property. So the big flaw in your plan is the lack of a deposit for the jointly owned property. For your plan to work, you need to find at least 10% of the value of the property you want to buy to put down as a cash deposit — although a deposit of 15% would be better because the interest rate you would pay on the mortgage would be lower.

Virginia Wallis

The Guardian

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