I currently own a property valued at 230K with a 133K mortgage. I am now planning on renting out this property and buying a new property jointly with my girlfriend. The new property will cost 600K and we will make a 200K deposit. I have checked the various mortgage calculators and based on those we will be able to take out the 400K mortgage needed. However, I am wondering how my current mortgage will affect my application for a new one? Given that I can rent out my current property, I will make a profit on it. Will the mortgage companies look at it that way or will they see the current mortgage as a liability and not offer us the 400K mortgage we need?

I am also wondering if I will be able to receive a "consent to let" without changing the mortgage that I currently have. I talked to the mortgage company and they said that I would be granted permission (on a two year term) given that the flat will not be rented out solely on an investment purpose. Would it be considered "solely on an investment purpose" if I move to a house close by with the sole reason for my move being that we need more space and want a nicer place now that we are moving together?

Many thanks.

Interesting. I'm not 100% sure of the answer - I suspect you won't know exactly unless you approach a lender with regard to the mortgage on your new property and disclose to them all the relevant facts. It will also be the case that different lenders will have a different approach.

I suspect if you maintain your current mortgage and simply get a consent to let, then a new lender will probably want to take that loan into consideration. Your income would need to be sufficient to service both loans, so enough for £533,000 not £400,000. If the current mortgage were changed (by re-mortgaging) to a 'proper' buy to let loan, then your new lender probably wouldn't take it into account. Some lenders give consent to let in certain temporary circumstances i.e. you are moving away because of work - but there is a distinction and your current lender might be unhappy if your long term intentions were to hold the property as a buy to let investment, rather than selling it to clear the loan.

It is difficult to give a definitive answer.

Thank you for your reply. I am hoping that they will take into consideration that the property with the 133K mortgage will have an income exceeding the interest payments and thus contribute to a net profit. It seems like we would qualify for a mortgage around 450K so there would be some missing to get it up to the theoretical 533K. Are mortgage lenders generally as strict with the loan to salary ratio even if you have a sizable deposit (less than 70 % LTV) like in our case?

They are much more strict now than ever before - the events of the last 12-18 months are to blame.

Two things I would add,

1. Your new mortgage lender may be willing to take into account the rental income - effectively increasing your income by an equivalent amount.

2. Banks who you have a long term, profitable (for them) may be more willing to lend than others. This would be particularly relevant if you had your business and a good relationship with your business banking manager.

Makes some calls to lenders or speak to a good (preferably recommended by someone) IFA or Mortgage Broker.