Buying a second home?

boybeck

Hi, I was after some advice please.

I want to buy a second home worth £200,000 with my partner, the following is how I think we can do it, I'd love to hear your thoughts/advice.

I already own a house with a £40,000 mortgage and it is worth £150,000.

My partner will fund half the cost of the house (£100,000) separately and hold the mortgage.

I was planning on remortgaging my existing house to completely pay for the other £100,000 and rent my old house out.

Is this the correct way of doing things?????

Obviously I need to see an IFA for professional advice but I want to see if I'm thinking along the right lines.

Cheers

F_T_Buyer

So basically you want to buy a new house to live in, and rent out your old one.

It's probably the most tax efficient way to do it. But before we can advise what could you rent it out at? How many possible voids will there be (i.e. how many other are also trying to rent at present)?

Personally I think BTL is too much risk/hassel for too little reward.

Tassotti

With a BTL mortgage on the 150K house, the rental will need to be in the region of £700 pcm.

Is this achieveable in the area?

F_T_Buyer

Tassotti wrote:

With a BTL mortgage on the 150K house, the rental will need to be in the region of £700 pcm.

Is this achieveable in the area?

What yield would you look for on a BTL?

From those figures (700*12/150k), it would mean the property would achieve a 5.6% yield. I think that's too low, I would go for at least 7.5% absolute minimum.