My wife and I are looking to purchase a second property in June or July 2009. This is a lifestyle move in that we want to move to a more desirable area (as we're planning to have kids) and we will probably rent out our current property. We don't have a single debt; no credit cards, our car is paid off and no loans.

I appreciate it's difficult to predict what the lending market might be at that time but using the current climate as an example, are we being realistic? We plan to put only a 5% deposit on £250k property.

We earn a joint monthly income of £5400. Our current mortgage is £942 per month.

Looking on this website, there are products available at 5% deposit, mostly coming in at £1600pm.

Would anyone be able to advise whether £2500pm (not taking into account any rental income on our current place) would be seen as too much of a risk for a mortgage provider to lend us the money for the second home?

Thanks for your help.

Mandala...I v much doubt u will find a 95% mortgage, simple reason with property prices dropping the 95% mortgage could become a 100% mortgage.......Also yr current mortgage would become a BTL mortgage & calculations on that would possibly be rental income being 125% of the mortgage payment (on an interest only basis,,,,,for tax purposes) You would be best discussing this with an adviser, ask yr friends or family to recommend an independent adviser they have used.as their are other possible options let to buy/releasing further equity etc .good luck but pls dont overstretch yrselves, as you also have to consider if u face a rental void (no rent) can u support 2 mortgages

Thanks Guys -

I really appreciate your input. Getting a mortgage in the first place (for a second property) and the amount I'd overstretch ourselves are obviously the key concerns.

Realistic? I think it's a great idea!

I am in the process of doing something similar now. Using a "Let to Buy" mortgage at 85% LTV, I got the 15% deposit by remortgaging my existing property on a 95% interest only mortgage (yes I know the risk of this, but their valuation was about 10 years old and the figures work for me). The main criteria for the new mortgage was that my rental income on the existing property had to be at least 125% of the payment, which it was.

Now my plan is to buy my second property and obtain permission to let it and use the rental income from both to pay my rent in another property. So I'll basically be living rent free while having two mortgages paid off by tenants, and enjoying the bonus of being able to buy a second larger property at a ridiculously low price because of the drop in market.

Don't stretch yourself, and go over the figures with a couple of reputable mortgage advisors, but be creative and let the banks work in your favour for once. :) The chances are, if you could rent your current property for 125% of the mortgage payment, you're much closer than you think.

Have a look at this article for a start - http://www.godirect.co.uk/mortgages/let-to-buy-mortgage.php

Good luck!

A great idea eh?? Have you considered the following scenerios:

1. The housing market continues to fall leaving you with 2 properties with no equity in them and 2 mortgages to service.

2. You have bad tenants who don't pay your rent/trash your houses leaving you with void periods and costly repair bills.

This leaves you with 2 properties with no equity in so you can't remortgage to release any money or move to a better mortgage product. You can't sell due to a stagnet housing market and are left having the hassle of managing 2 houses with the rent just covering your interest only mortgages. Doesn't seem like a great idea to me.

A great idea eh?? Have you considered the following scenerios:

1. The housing market continues to fall leaving you with 2 properties with no equity in them and 2 mortgages to service.

2. You have bad tenants who don't pay your rent/trash your houses leaving you with void periods and costly repair bills.

This leaves you with 2 properties with no equity in so you can't remortgage to release any money or move to a better mortgage product. You can't sell due to a stagnet housing market and are left having the hassle of managing 2 houses with the rent just covering your interest only mortgages. Doesn't seem like a great idea to me.

Now now Mr XXX... no need to be so pessimistic. Of course my mentality is the opposite and very optimistic, but in response:

1. Of course the housing market will continue to fall, which is why I have my finances in place and as I mentioned in the original post, haven't bought a second property yet. I'm waiting for it to fall even further to grab a really great bargain. :) And before you say it, the original property (also as previously mentioned) was remortgaged on a 10 year old valuation. The actual current market value would mean that the LTV was 78% which is not nearly as bad although obviously still a risk.

2. My current tenant has signed a corporate lease for 3 years and paid half of the rent up front. Due to the high specifications of the property I demanded a higher deposit. There is less risk in this rental than most.

Now this leaves me with bargaining power to snap up a cheap property when the time suits me best, and great tenants who I can trust and who have already paid for 18 months avoiding any such void periods.

Of course all that sounds rather smug, and I'm sure you could find an element of risk in anything to do with property purchasing or letting. But, I have done my research and I'm playing it rather safe, while taking very calculated risks.

Don't jump the gun Mr. XXX. My advice to you would be to look on the brighter side of life. :)

Smile and have a nice day.