Ok, I now understand that I would be able to offset mortgage interest payments against the taxable rental income!

So my question is would it be possible to get a buy-to-let morgage on a property I already own outright? Could I then use this morgage to offset the rental income? I would like to know if I have understood this right..

Thanks for your very helpful advice tt lady! The only thing i don't understand is the quote below, could you please explain this..?

tt lady:

Don't forget to set aside the tax on the rental income from your existing home though

You could try speaking to a mortgage broker but I suspect that you won't be able to get a mortgage until you've been out of the IVA for 6 years. If you can find someone who will lend to you then the route to getting a deposit would be to raise a buy to let mortgage on your existing house and then get a residential mortgage on the new one. A complicated stuation and possibly not tenable due to your credit history. Presumably your Mum isn't willing to remortgage again to fund your new purchase ?

A simpler solution would be for you to rent out your existing house and rent in the area you want to move to whilst saving for a deposit. Then in 4 years time when the IVA falls off your credit record you should have at least the 10% deposit you'll need. Don't forget to set aside the tax on the rental income from your existing home though and I doubt you can offset the interest payments you're making to your mother unless you have a formal agreement and she declares them as income to the taxman.

Hi,

I am unsure of which morgage to apply for as I seem to fit into most catagories.. please let me explain..

My property is worth £58000

I bought my Council maisonatte under the "Right to Buy" a year ago. I now own this property outright as my mother got a re-morgage on her own house (£38,000 after discount). I pay my mother this money informally and then she pays it to her bank.

I would like to move house but if I sell now I will have to pay back 80% of the discount back to the council. Which I obviously don't want to do.

I thought I could get a morgage on a house in a cheaper area for £65,000. I have no deposit, only the equity in my home.

I would then let out the maisonette (current ex-council property).

As you can see my situation is quite complicated and to make it a little more complicated is had an IVA on 18/04/05 but fully settled on 24/5/07.

Can anybody please advise what I can do for the best and what morgage to apply for?

Thanks in advance..!!