I have a £70,000 mortgage on my house.
I am about to come into £170,000. With this money, I want to pay off my mortgage. Turn my house into a rental property and use the remaining £100,000 as a deposit for my personal house with a £200,000 mortgage.
But I could keep the £70,000 mortgage and use the £170,000 as a deposit on my new house with a £130,000 mortage. potato - potAHto.
My reasoning for thinking the former is better is that I would have to change the terms of my first mortgage to a "buy-to-let" mortgage and pay a higher interest rate. It's better to have the loan on my personal house because then I'll pay the lowest rate of interest.
Is there any reason why doing that would be the wrong thing to do? Maybe there is something I am missing.