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Selling family home to fund buy to let
pintandahalf
Posts: 1 Newbie
Hi all,
I am entirely new to this so please understand if I make obvious errors.....
My wife and I own our home. The house is worth around £325k. The remaining mortgage is £250. We are in a fixed mortgage, but this is ending soon.
We would like to sell our house, move to a cheaper house (£249k - under the stamp duty threshold) and use the equity that is released towards a small buy-to-let.
With a bit of work I can get the house up to full marketable value (maybe even a bit higher if things go well) in order to maximise the profit by the time the fixed rate mortgage period comes to an end.
We have also put aside a few thousand pounds to help with moving costs, solicitor fees etc (though I doubt it will be enough and I am sure we will have to use a bit of our profit to cover all the costs).
We anticipate having about (hopefully and at most) £60-£70k "left" after the sale. We would then be looking to buy a "buy to let" for about £110k in a nearby, cheaper but popular, area (where I grew up, so we know it well).
Its the first time we have done anything like this, but we want to make our money work for us and doing it this way should minimise our borrowing (for the buy to let) and maximise the profit from this investment property.
Sounds simple!! I am sure there are a million and one things that we dont know about, or havent considered. So loads of feedback about any aspect would be really great...!
Thanks:beer:
I am entirely new to this so please understand if I make obvious errors.....
My wife and I own our home. The house is worth around £325k. The remaining mortgage is £250. We are in a fixed mortgage, but this is ending soon.
We would like to sell our house, move to a cheaper house (£249k - under the stamp duty threshold) and use the equity that is released towards a small buy-to-let.
With a bit of work I can get the house up to full marketable value (maybe even a bit higher if things go well) in order to maximise the profit by the time the fixed rate mortgage period comes to an end.
We have also put aside a few thousand pounds to help with moving costs, solicitor fees etc (though I doubt it will be enough and I am sure we will have to use a bit of our profit to cover all the costs).
We anticipate having about (hopefully and at most) £60-£70k "left" after the sale. We would then be looking to buy a "buy to let" for about £110k in a nearby, cheaper but popular, area (where I grew up, so we know it well).
Its the first time we have done anything like this, but we want to make our money work for us and doing it this way should minimise our borrowing (for the buy to let) and maximise the profit from this investment property.
Sounds simple!! I am sure there are a million and one things that we dont know about, or havent considered. So loads of feedback about any aspect would be really great...!
Thanks:beer:
0
Comments
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How much would a Buy-To-Let mortgage cost to service? Could the mortgage payments be met in full if you had either no tenant or a defaulting one? What are current rents in the location you are thinking of buying in and what return could that earn you once you've paid tax on any profit?0
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Can I ask a question? When you say that you have around £250 left on your current mortgage, do you mean £250 or £250K?
Cos if you have £250K left then your numbers don't add up. You will be trying to buy two different houses with just £60K - £70K maximum. That is not a lot of money.
From what you say, you'd like to buy a £250K house for yourself and another BTL for £110K. So £360K, of which you would pay £60K - £70K yourself.
That's leaves you with at least £300K worth of debt. What is your salary? You'd need a large salary to be able to service a debt of £300K and if you don't have a large salary, you'll be turned down for the residential mortgage anyway.
Taking on £300K worth of debt (and having zero savings) is not a great idea in this economic situation.0 -
Taking on £300K worth of debt (and having zero savings) is not a great idea in this economic situation.
Agreed - it sound to good to be true so I would re-do your sums again. 2011 is going to be tough all round and this is a risk too far.Value-for-money-for-me-puhleeze!
"No man is worth, crawling on the earth"- adapted from Bob Crewe and Bob Gaudio
Hope is not a strategy
...A child is for life, not just 18 years....Don't get me started on the NHS, because you won't win...I love chaz-ing!0 -
If you sell at £325k and thus have £75k of your own cash from this, when you reinvest into buying another house at £250k you will necessarily need to utilise a significant chunk of this £75k as the deposit (equity portion) on the new house as there are no 100% mortgages nowadays. You will be looking at a minimum of 10% ie £25k which is OK as long as you don't mind a steepish rate to pay. You will still have stamp duty to pay of £2500 so that's money down the drain.
You need to assess exactly how much money you will need to buy the other place, because it may simply not be feasible given the costs with moving.0 -
Read Tessa Shepperson's book or a similar one. Amazon or your local library.
AI bigger mortgage on the BTL lets you offset the interest against income for tax purposes.0 -
Erm you are planning on using *some* of the equity. YOu'll not get 100% mortgage on your own home right now.
Look on rightmove for selling prices, houseprices.co.uk for sold prices and use all local rental agents to guage rents.
If the place needs work then buy one ready rather than waste time and effort doing one up. The market is on a slide not an up.0 -
Your house is worth around £325k.
Why do you know that.
have you had it valued, have you had an offer at around £325k
In the present market you have to find a buyer who wants to pay your £325k
Then the new house at £250k the deposit might have to be 20% = £50k. Not much left for a buy to let after that.There will be no Brexit dividend for Britain.0 -
To start with you need to check the BTL stacks upWe would then be looking to buy a "buy to let" for about £110k in a nearby, cheaper but popular, area (where I grew up, so we know it well).
.....
I am sure there are a million and one things that we dont know about
What do these £110k place rent for.0 -
I don't understand why you want to do this. Surely there are better ways of making some extra money?0
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