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LET TO BUY.Im confused

Hi, in need of a basic guide to what we can borrow. I own a house worth 160k morgaged for 80k. Rented out for 700 pcm not including C/TAX. Wife house curently living worth 110K morgaged for 50k, can rent out for 550pcm. I earn 10k wife 15k. No other debts. I Have a 50k deposit also. 1 car. Our out goings are small. We would love to move house but are totally unsure what we can borrow, so confused. Ball park figure would be great if anyone could help. Thanks..


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you could get a let to buy on both properties, borrow a little extra on both (70%LTV max) and purchase somewhere new with the total deposit (~100K) but you can only borrow 3.5-4 x 25K ... that really is your limiting factor. Any rent will cover the mortgage interest and other fees on the existing places, then the rest is taxed at your normal income tax rate. There's capital gains tax to worry about when you sell any of the rented properties but that's something that can be eased at the time. but you need to think about rising interest rates and all the usual things.

You already own property of 11x gross salary. You should consider reducing that rather than taking more on. What if prices fall further which could happen when interest rates eventually rise. Your house, which is rented out will be subject to Capital Gains tax once you have been out of the property for 3 years. Consider selling it before then. Your wife's house is not yet subject to CGT, so you could let that for 3 years. Meanwhile, you are not likely to get much more than £80,000 mortgage, so you would probably need to sell one of the properties anyway to buy what you are after, so yours would be the better one to go because of the CGT. If you have already exceeded the 3 years substantially, consider transferring half to your wife first to double the Annual CGT Allowance. Mike