2nd mortgage. Is this a mad thought?

rover25

I'll be honest about what I'm saying and tell all. We bought out house 2 yrs ago for 175,000.(95%) I know. Seemed a good idea at the time:rolleyes:
I have seen other houses the same in our area take a huge drop in the last month. Scary for us but agree it's great for others like ftb.
We have a huge prob with noise from next door. I grew up in the country in a detached house and I really hate the noise that comes from next door semi. We seem to have a really poor standard of sound proofing ie. hear every door/ cupboard close etc.. . My husband doesn't mind it as much as me but I would love to move but obviously can't due to negative equity.
I seen a lovely house in the country today on local agents website. offers around 85,000. We are expecting a £10,000 sum in August this year and I am wondering than rather than put that into paying off the current mortgage, would it possible to put it down on a 2nd mortgage and borrow 75,000.
Am I mad for even thinking it is a possibility, would banks laugh us out the door. Really think we will prob move out and rent somewhere in the country if we have no other choice and keep paying current mortgage anyway. Jobs are both secure and together in total earn approx £50,000 per annum.
Thoughts and opinions welcome.

paulwest101

check out how much local rental prices are where you live it could cover some of your existing morgage but factor in the you will need to pay tax,fee ect to a agency if you go down that route

hearts

Very unlikely. Your income wouldn't cover both mortgages.

Anon

Not a mad thought at all - if the rental market for your existing property is sound then it could be a possibility, as mortgage companies may take that income into account when working out any available mortgage.

Mortgage payments and other expenses go against income before tax, therefore if you don't make any profit there isn't any additional income tax liability. Remember that there could be capital gains tax liability when you eventually sell it though.

Anon

paulwest101

you do pay tax if its on a 2nd property you rent out martin was talking about this himself last year and how lots of people are getting unxepected tax bills

checked with my brother(acountent) as well and the whole morgage payments and expenses is a urban myth

Rick62

Why do you say its a myth? You can offset interest and expenses, first time i've heard it suggested that you can't.

Anon

paulwest101 wrote: »

checked with my brother(acountent) as well and the whole morgage payments and expenses is a urban myth

Sorry, but you and your brother are mistaken - the whole buy to let and rental market would not work if people couldn't claim the cost of the loan (interest, not the repayment) against rental income and other expenses, before tax.

Anon

tartanterra

paulwest101 wrote: »

you do pay tax if its on a 2nd property you rent out martin was talking about this himself last year and how lots of people are getting unxepected tax bills

checked with my brother(acountent) as well and the whole morgage payments and expenses is a urban myth

As a landlord, I can assure you that it is far from a myth.
It is no different from any other commercial business. In fact, you can even claim "wear and tear" allowance. If your brother is an accountant, then I think, you have possibly misconstrued what he has told you.
It may be worth you checking the HRMC website for further clarification.

catriona69

I'd say to do it you would need at least 15% equity in your home and a 15% deposit on the one you were buying. If you don't have this, I very much doubt and mortgage lender will be able to give you a deal. That's the advice a mortgage advisor at A&L gave us (we're in a similar situation except that we've got about 10% equity in our home).