Buying a second home....

Tixy

BarryBear83 wrote: »

and basically I think the main issue is I cant be bothered to wait to save up an additional £10k.

Can't be bothered to wait an extra 6/7months to save up that money at the rate you aer saving?

In terms of keeping it until you own it outright as a pension pot, obviously you'll pay tax on the capital gain on the property when sold which will eat in to your nest egg. And have you factored in the cost of this mortgage for the next 25 years (and have you accounted for the fact that the base rate will be significantly higher that it is now for the majority of that term?)

FraudBuster

ACCA membership

Mortgage fraud is not advised.

SteveV2

If it's in neg equ then surely there will be no capital gain? I would guess NE due to falling house prices?

I'm in a similar situation, well kind of.

Looking to rent my house out with a mortgage of £38k left on it. Buy next house for around £150k. Have deposit waiting of £42k.

Been told I can port the £38k mortgage over to the £150k house. Use original house to raise funds to buy £150k house, based on a 60% LTV, which is £108k, which works so well with the £42k deposit

My main concern is capital gains and interest rates. I have heard alsorts about capital gains. Maybe someone can clear it up for me. Bought house for £85k. Spent £25k renovating and extending. Valued now at £185k>190k. So a £80k gain. But..... was told that the capital gain starts from the moment I turn it into a btl and not the day I bought it for residential use.

It's all very confusing

Tixy

SteveV2 wrote: »

If it's in neg equ then surely there will be no capital gain? I would guess NE due to falling house prices?

The capital gain comment refers to the plan to keep the property for the next 25years by which time OP is expecting house prices to have increased and his mortgage to be repaid.
And he'd then pay capital gains tax as it wouldn't be his principal private residence.

Capital gains is quite a complex issue. You don't pay CGT for the proportion of the time the property is your main residence. And you also don't pay for the final 3years you own a property before sale.

Werdnal

OP, if you are successful in your application for Consent to Let (which is by no means guaranteed and you may incur additional costs, annual set-up fees, etc for your lender doing this), then I advise you read this post:

http://forums.moneysavingexpert.com/showpost.php?p=41160642&postcount=12

to gain an understanding of how to let your home. There are costs, legal implications and obligations when becoming a landlord. You need to keep a good contingency of cash to cover repairs and missing rent, you also need to declare your income for tax (annual self-assessment), and only the "interest" portion of the mortgage is an allowable cost against the tax due.

kingstreet

Post #3

try to get consent to let

Post #4

You'd need permission from your current lender to let out your current property

Post #7

You require consent to let from your current lender. This may be granted, it may be subject to payment of fees or a higher rate. It may not be granted.

Response to post #10

BarryBear83 wrote: »

Thank you!!!!!!!!!!!!!!!!!!!!!!!!! Consent to let is what we've been after all this time!!!!! Finally we've got somewhere!

Beckyy

In my opinion, I think you'd be better off staying where you are and saving with your higher salary, then sucking up the negative equity and moving. Keeping the house won't necessarily mean making a profit - there's no guarantee of house prices rising, or rising enough to cover the equivalent of all your expenses (inc. interest) after income and capital gains tax on any rise in value.

If you've got enough money to throw at the plan of letting it out and taking on a second mortgage, and want to, then by all means do - but it doesn't mean you will necessarily profit overall.