Second Mortgage

Peter_L

Have asked this question before but thread died without a proper answer so asking you knowledgeable lot for advise:-

Have a house worth about £130k (£150k 2 years ago) with £99k mortgage @ 1% above base lifetime tracker with 17 years to go with Intelligent Finance (who no longer does new mortgages)

Have been gifted my parents house worth £170k mortgage free

Here's the deal:-

Want to get a mortgage on parents house (now 100% mine) for about £70k to gut and extend it and stay in mine until job done. Will then want to sell my house for as close to £130k as possible (more if market picks up !!!)

Question is - can I get another mortgage for £70k from the equity I have on parents house ? Have spoken to a WOM advisor who says yes - Abbey will offer this @ 2.79% Lifetime Tracker for £995 fee and £995 broker fee but something doesn't sound right ? Abbey has carried out credit check and found no probs ...

dimbo61

Do you earn enough to pay 2 mortgages ?
One of £99k and another of £70K
Have you looked at offset mortgage that way you take out £70K mortgage and put that money into offset account then pay for building work as you go along and when you sell other house you can put the money into the offset account until deal/term finished!

Peter_L

Thanks for the response - joint income of £50k so should be ok to pay both mortgages and then only expect to do so for 12 months max. as hope to sell as soon as I can move into the other one (leaving a £40k mortgage approx.) Don't want to bother with offset as you suggest as never know when builders will need cash ...

VIGILANT22

What status is this property going to be...2nd home?!

Peter_L

VIGILANT22 wrote: »

What status is this property going to be...2nd home?!

No - I want to do up my parents (now mine and unmortgaged) so that we can move in permanently and then sell mine - pay back the £99k and plough back the surplus into the new mortgage to reduce the new mortgage ... hope this makes sense ?

VIGILANT22

Peter_L wrote: »

No - I want to do up my parents (now mine and unmortgaged) so that we can move in permanently and then sell mine - pay back the £99k and plough back the surplus into the new mortgage to reduce the new mortgage ... hope this makes sense ?

This is classed as a 2nd home....speak to an MP they will tell you how to mitigate CGT(CAPITAL GAINS TAX)!!...:)

Pincher

I would try to keep the base+1% if I could.
Port it to the £170k house, then raise a £70k no penalty mortgage on the £130k house, which you pay off by selling the house whenever.

Peter_L

VIGILANT22 wrote: »

This is classed as a 2nd home....speak to an MP they will tell you how to mitigate CGT(CAPITAL GAINS TAX)!!...:)

Done my homework - not 2nd home, not subject to CGT as it was parents only home went through solicitors (though Wolstenholmes :eek:) and now registered with Land registry so all above board. Not subject to stamp duty as below threshold

I would love to port product to £170k home and do as suggested but sadly IF don't do new mortgages so unable to.

VIGILANT22

Peter_L wrote: »

Done my homework - not 2nd home, not subject to CGT as it was parents only home went through solicitors (though Wolstenholmes :eek:) and now registered with Land registry so all above board. Not subject to stamp duty as below threshold

I would love to port product to £170k home and do as suggested but sadly IF don't do new mortgages so unable to.

you pay stamp duty when you're buying a house
you pay CGT when selling a house
2 homes only 1 can be principal residence
Done homework!!???.......could try better............:rotfl:

Pincher

VIGILANT22 wrote: »

you pay stamp duty when you're buying a house
you pay CGT when selling a house
2 homes only 1 can be principal residence
Done homework!!???.......could try better............:rotfl:

The Inland Revenue does not expect people to be able to sell their previous home immediately, this would be unreasonable. When you move from house A to house B, you usually sell A on the same day because you can't afford two mortgages, not because of the Inland Revenue. You have up to three years to sell house A after you move out, without paying CGT. It is good practice to declare house B to be your Principal Private Residence when you move in, otherwise the Inland Revenue could carry on regarding house A as your PPR, and house B as a second home, which does raise the issue of CGT.

You acquired the new house at £170k for CGT purposes, because you submitted a valuation to the Probate Office. The inheritance process nullifies the prior CGT gains, not because it's your parent's PPR.

Peter_L

VIGILANT22 wrote: »

you pay stamp duty when you're buying a house
you pay CGT when selling a house
2 homes only 1 can be principal residence
Done homework!!???.......could try better............:rotfl:

No money changed hands as it was gifted so no stamp duty and was done before the stamp duty holiday finished in November

No CGT as it was their only house (sadly dad passed away and mum now wants to live in old folks flats)

Mum still currently occupies the house even though my name now appears on Land Registry paperwork and will move out when we begin renovation ...