Upsizing and holding on to the current flat?!

[Soggychip]

My wife and I own a property outright in London. We would like to move out of London and purchase a property that we will run as a Bed and Breakfast, up North.

We've had the house in London valued at around £380 000, with a rental income of £500 per week. The properties we are looking at for the B&B - with enough rooms to provide a decent income in a desirable location - are around £350 - £500, 000.

Originally we were thinking about selling the London property but are now hoping to hold onto it and rent it out. It seems we can get a buy-to-let mortgage for £285 000 and use this as investment in the B&B - but would a bank consider giving us another mortgage to cover the rest of the B&B's purchase price? Especially considering we would be leaving our current employment (joint income of £43,000) and essentially only having the speculative income of the B&B as income - and only £5K savings.

Are we metaphorically eating our own cake by wanting to hold onto the London property?

Thanks in advance,

Simon

[IFA]

Hi Simon,

If you are looking to buy an established B&B business, with several year's accounts, a proven track record of profitability, and ideally some advanced bookings for the next few months, then you may be able to secure some commercial finance on the strength of that.

If you are looking to buy a residential property to convert to a B&B then you are likely to find it difficult because your future income is unable to be quantified, and if you do not have a track record of working in the hospitality trade a lender will be even less inclined to take a risk on you.