Buying second home, can I hold on to first without selling?

[FTB81]

Hi, I have an outstanding mortgage on my house of about €185k. The house is now worth in the region of €450k. I bought this house myself and am now looking to buy something bigger with my partner. Ideally, I'd like to hold on to my house and rent it out. Is this something that the banks take into consideration? If we were to try to buy somewhere for say €600k and had the 20% deposit without selling my house, is the rental income or equity in my house taken into account in terms of the mortgage they would give us?

Thanks!

 

[RedOnion]

Have a look at this recent thread https://www.askaboutmoney.com/threads/move-house-and-keep-both-mortgages-temporarily.209074/

You'd need to provide a lot more information to get meaningful advice, but the above case might give you enough info to start.

 

[FTB81]

Thanks a million! I'll take a look

 

[Dave_Curry_IMC]

Hi, I have an outstanding mortgage on my house of about €185k. The house is now worth in the region of €450k. I bought this house myself and am now looking to buy something bigger with my partner. Ideally, I'd like to hold on to my house and rent it out. Is this something that the banks take into consideration? If we were to try to buy somewhere for say €600k and had the 20% deposit without selling my house, is the rental income or equity in my house taken into account in terms of the mortgage they would give us?

Thanks!

The likely rental income will be taken into account, but will be discounted by between 30%-50% (depending on the bank), to allow for taxes and other costs. Your current mortgage repayments will then be stressed by increasing the rate by 2%, or even more by some banks, which assess the mortgage on an investment mortgage rate even if you currently have a homeloan or tracker rate. The stressed mortgage repayment is then deducted from the discounted rental income. This calculation will have either a negative, neutral, or positive effect on the rest of your application. Given that your current mortgage balance is only €185k, I imagine it won't have a negative impact, unless the remaining term is quite short. The fact that there will be a lot of equity in the house will be seen as a positive, but it won't add anything to the maximum mortgage available for the new house.

Best regards,
Dave Curry (broker)
https://www.linkedin.com/in/davecurryirl