Selling houses - where is best place to put deposit

Seeking

Hi

I hopes someone can help with some questions I have. My partner and would like to buy a property together but have 3 properties between us that we would like to sell. Q1 it looks very unlikely that we will sell them all at the same time, if we sell 1 or 2 where can we put the money- after paying off mortgages - until we have sold all 3, to be able to put down as deposit on the house we want to buy ? Q2 Is there another way to approach this like finding a mortgage that will allow us to pay off a lump sum as we sell the properties. If all 3 sold at today's price then we hope to have a deposit of around 100k. Any advise would be very much appreciated.

Thank in advance.

Thrugelmir

Do all the properties have mortgages on them?

holly_hobby

In theory you could get a penalty free mortgage deal, and make lump sum repayments as and when each of your properties sell.

However, your borrowing capacity may be hampered by the existing properties, if they are mortgaged (as Thurls. has already asked), and if they are deriving a rental income from being rented out.

Once we know more details we can give guidance on how to proceed mortgage wise and what CGT liability you may have to declare on each of their disposal.

Hope this helps

Holly

dimbo61

Have a look at offset mortgages ! that way if you sell one or two of the properties you can put the profit you get from selling the second/third property into the offset account

Seeking

Hi

Thanks for responses. Was not sure how much info to give, so I hope this helps:-

Property 1 has a repayment mortgage and owned by partner for about 10 years. Hope to make about 50k profit

Property 2 has had a buy to let mortgage for the last 6 years I had previously lived their for 4 years. With allowances etc I don't believe I have any CGT to pay at the moment. Hope to make about 50k profit.

Property 3 has interest only mortgage for the last 4 years. Do not expect to make any profit in this location. will loose my deposit but should be able to pay back the mortgage.

Happy to answer any more questions and again thanks.

holly_hobby

Property 1 - owner by partner. Has it ever acted as your parnters main residence ?

If so that period and the last 3 yrs of ownership are excluded from CGT liability - the interim period is offset by annual unused CGT allowance.

Has it been let ?

If so he may further offset any gain by lettings relief (max 40k).

From the 50k - gross gain mentioned, and inconsideration of the aforementined allowances/reliefs being applied, I don't believe there will be a CGT liability.

Property 2 - owned by you ? for the last 10 yrs.

First 4 yrs acted as your main residence = excluded from CGT

Let for last 6 yrs

Of which the latter 3 yrs of ownership proceeding the sale are also excluded from CGT liability calc

Therefore lseaving a CGT liability on the intrim 3 yrs - which will be offset by both your personal unused annual cgt allowance and lettings allowance (40k max)

You would accordingly need to make a very healthy gain (in excess of 50k ) to be liabile to any CGT bill.

Property 3 - sounds as though this is your residential property ? If so, no cgt liability at all.


Mortgage on new property and in relation to any mortgage that will remain outstanding at completion.

Any mortgaged property that is let with a proven rental income, may well be excluded from your liabilities, in relation to obtaining your new residential mortgage. (as typically seen under let to buy arrangements)

Any property that is mortgaged - but is not let with a rental income - will obviously be noted as a liability, and the monthly mortgage payment duly adjusted against your income, as part of any affordability calculation by your new lender - which will obviously restrict your borrowing capcity.

Of course, even with the application of any mge liabilities, your income may still be sufficient to obtain your desired amount - in that case, as mentioned earlier, a penalty free deal OR offset mortgage would be the arrangement you should seek in relation to making significant lump sum reductions as and when your existing properties are sold.

Hope this helps

Holly

Seeking

Thankyou for the information and advise. I think I am in a better position now and have started to look at offset mortgages which I think maybe the best way forward for us.