Mortgage Advice required:FAO Martin

sjraza

Hello Martin,

I need some mortgage advice please. I have a mortgage-free property as of last year.

I now need to purchase another property to upgrade (4-bedroom house), but wish to keep the original property (mortgage-free as possible) so that I can rent it out.

I have two options:

1) Consider new Govt. Buy Schemes, which means I need to transfer the deeds of the original property to my wife in order to qualify. However, the new 4-bedroom homes are very expensive which affects the affordability limit ( though it is possible for the initial deposit).

2) Re-mortgage original property to pay for the deposit for next home (either new or existing homes). This appears to be a feasible solution both deposit and affordability , but it means the house is no longer free-hold and it means a step backward.

Please advice which is the best option to go for.

Thank you.

Dan-Dan

Isnt this against the spirit of the help to buy schemes ? (no idea about the law!)

ACG

Martin probably doesnt come on these forums but even if he did as far as im aware hes not allowed to advise on mortgages as its a regulated industry.

If you want specific advice you need to speak to a mortgage advisor.

Building_Surveyor

Sorry but I think option 1 is immoral. Whether the scheme allows it or not.

mkmini81

I have a mortgage free 2 bed and need to move to a larger 3 bed due to expending family. With the help to buy you can not have another property against your name on the land registry. I have had to get my 2 bed SSTC before i could progress.

beecher2

I agree that the first option is immoral and incredibly greedy.

manzanilla

1) Consider new Govt. Buy Schemes, which means I need to transfer the deeds of the original property to my wife in order to qualify. However, the new 4-bedroom homes are very expensive which affects the affordability limit ( though it is possible for the initial deposit).

This may or may not be immoral, but there are other problems with it.

First only someone who has been through the process with a fine toothcomb will be able to say if it will work, or whether there is something on the forms that will catch you out.

Second, new builds tend to be more expensive than similar older properties, so you may actually not make any money on doing this.

You also need to look at your tax affairs. If the old house is all in your wife's name, then she will pay all the tax on the rental income and have all the CGT bill (if any) when it is sold.

2) Re-mortgage original property to pay for the deposit for next home (either new or existing homes). This appears to be a feasible solution both deposit and affordability , but it means the house is no longer free-hold and it means a step backward.

Actually the house is still free hold, it is just no longer mortgage free.

But this isn't really a step back at all. What matters is what your total assets are and what your total debts are. Not which house the mortgage debt is secured against.

It is also going to be easier to offset the mortgage costs against the rental income if the mortgage is on the house that is going to be rented out. It may be possible the other way, but it's not so simple and it's going to cost you more in professional advice to try to sort it out. This reduction in tax on the rent is VERY important for how the finances of the different options stack up.

_Andy_

'martin' is a highly successful affiliate marketer with a net worth of millions, with a team of people who write his 'journalism' for him. I highly doubt he will read this post.

Dan-Dan

Damn! I was hoping one day he would `like` one of my posts


:sadface:

opinions4u

Dan-Dan wrote: »

Damn! I was hoping one day he would `like` one of my posts

Me too. But he prefers to let his people ban me from time to time!

Dan-Dan

opinions4u wrote: »

Me too. But he prefers to let his people ban me from time to time!

Do i know who you are from an previous life?