Best way of buying 2nd home?

RichH6109

(ignore - incorrect)

Tim_L

Another way of looking at the 100% increase in your current house is that it mightn't be a bad time to cash in your profit, particularly if you take the view that we may be heading for a crash. You'll then be able to use the equity to get a much nicer house in the South - only a modest increase from 118K to 150K or so will give you around 270K to spend (there is the old adage that no-one ever went bankrupt by selling at a profit!). At a 2.5 times multiplier you can easily get up to a total purchase price around 280K, and you may well find you can get higher multiples.

You can currently take your profits free of CGT because the house in the North is still your main residence - otherwise because of the short term nature of the gain you would have a significant tax loss.

If you were to retain the house you would have to remortgage with a BTL so you can get the full salary multiplier for the house in the South, and you'll be very exposed (in two locations) if there is a price crash.

Relocation is a difficult one though, as it's always very tempting to keep one foot anchored in the previous location in case things go sour and you want to return. And of course it's very easy to make mistakes when buying a house in a location you don't know well. My instinct would be to sell up in the North, and rent for a short period in the South to get your bearings. You'll be in a very very strong buying position as effectively a cash buyer with 118K of deposit, bearing in mind there is a definite slowdown here and I get the impression houses are really not shifting quickly.

Though why you would want to move from the North, with it's wonderful infrastructure, and quality of life, to the stressed out and cramped South is beyond me. I'd move back like a shot if I had the opportunity!

RichH6109

(ignore - incorrect)

Mortgage_Master

Hi Rich,

Just to add a couple of points. Please note this isn't meant as advice, only as general observation. There could also be tax implication.

If you sell your home before you go and don't buy a new property simultaneously, I guess you'll have an early redemption penalty (ERP) to pay on your 5 years fixed rate. If you contact the Halifax, you should find that they will refund the early redemption penalty if you port your existing mortgage onto a new property within 3 months of redemption (with some lenders this can sometimes be extended to six months).

If you decide to rent down South and let out your property, then you should get 2/3 ARLA registered agents to give you some quotes. With this info you should then contact the Halifax and ask for their permission to let your home (consent to lease).

If you decide to buy after your 3 months renting and to keep your existing home, there are various options.

1. Keep your existing mortgage with Halifax on your Northern property (subject to the consent to lease) and take a new mortgage on the property down South. The main disadvantage of this option is the size of deposit which would be available for the new purchase.

2. Remortgage your Northern property on to a BTL mortgage and release sufficient equity to fund the deposit on you Southern home. (It's better to have a higher LTV mortgage on a BTL property than your residential property as the cost of interest can be offset against rental income). Then port your Halifax mortgage onto your new home to avoid the ERP and do a top up mortgage with them.

Simon

RichH6109

(ignore - incorrect)