I'm not sure if this is possible myself and my wife have mulled over this and we think it's a runner if we can get banks to agree first I said i'll post it here as we are probably missing something blindingly obvious (neither of us are great at finance).
We are both aged 38 one income earner taking home 900 a week after tax. Stay at home mum means no childcare but no income.
Current position
Tracker mortgage 20 years left 1% interest
Repayments 800 a month.
Value of house 310,000
Amount left on mortgage 190,000
Possible rental income 2000 a month pre tax
We are currently getting by and paying mortgage ok each month , we have 2 children under 10.
Savings of 320,000 ( we got lucky property sale after meeting each other and some other stuff we haven't been adding to this though) - Currently not saving but not over spending either.
Planned position
We want to buy a house for 400,000 , we would like to use some but not all of our savings.
What we have planned/purposed which may be laughed at by the bank given our low income is
Use 220,000 savings and get a mortgage of 183,000 over 21 years based on 3.5% interest rate we would have repayments of 1026 a month .
We are aware we would be over exposed to property , we would have 100k left for emergencies .
I calculate roughly that the 2000 a month we earn on our rented house would leave a profit of about 300 a month after tax . Even allowing for less if we got 226 a month profit from our rented house our mortgage repayments would remain the same.
We are down 220k in savings but in 21 years we would own both properties.
Is this a good plan or foolish? Will the banks just laugh at us?
Thanks
We are both aged 38 one income earner taking home 900 a week after tax. Stay at home mum means no childcare but no income.
Current position
Tracker mortgage 20 years left 1% interest
Repayments 800 a month.
Value of house 310,000
Amount left on mortgage 190,000
Possible rental income 2000 a month pre tax
We are currently getting by and paying mortgage ok each month , we have 2 children under 10.
Savings of 320,000 ( we got lucky property sale after meeting each other and some other stuff we haven't been adding to this though) - Currently not saving but not over spending either.
Planned position
We want to buy a house for 400,000 , we would like to use some but not all of our savings.
What we have planned/purposed which may be laughed at by the bank given our low income is
Use 220,000 savings and get a mortgage of 183,000 over 21 years based on 3.5% interest rate we would have repayments of 1026 a month .
We are aware we would be over exposed to property , we would have 100k left for emergencies .
I calculate roughly that the 2000 a month we earn on our rented house would leave a profit of about 300 a month after tax . Even allowing for less if we got 226 a month profit from our rented house our mortgage repayments would remain the same.
We are down 220k in savings but in 21 years we would own both properties.
Is this a good plan or foolish? Will the banks just laugh at us?
Thanks