Rent out our house after we buy another

klmwong

Hiya,

Need some advice / pointers at what to consider pls.

The other half and I have virtually paid for our house. We have left £100 outstanding so the mortgage company looks after the deeds and so on. It probably worth about £110k.

Anyway, it looks like we need to move as the council primary to secondary school rules have recently changed and we need to move closer to a good secondary school.

With our current house, we are looking at taking out a buy to let mortgage on it for about £70K or so (with a different provider) and use this money as part of a deposit on the new (new to us not brand new) house along with savings. Then we can get a normal mortgage on the new house. We would rent out our existing house.

It was our mortgage advisor who gave us an idea how much to remortgage our existing house for so we could raise enough deposit to make sure we got a preferential normal mortgage rate on the new house. Alternatively we would have much less deposit and have to pay a much higher rate of interest on the new house mortgage.

I am a stay at home mum so all of the mortgage payments would be paid by the other half.

What sort of things would I need to consider or know about? Presumably if we sold the first house at a much later date we would be liable for capital gains tax? Are there any other tax things I should know about? As I do not have an income at the moment can I make use of that somehow? I am also going to ask the other half for my name to also be on the new house so if he croaks then the house will automatically come to me and I don't have to worry about rehoming me and the 3 young uns and also he can't boot me out if we split up in the future (we aren't married).

Anyway, are there any implications or things I need to know about / do research on?

Thanks and sorry for being clueless!!

minniemaus1970

Hi klmwong,
A mortgage advisor will always give you the advise that most beneficial for HIM, not for you. He gets paid a commision on the mortgage you take out, so its in his interest that you take the maximum amount you can afford.
I remorgaged my house and he kept advising me to take an extra £20.000 to do up my house or buy a car he even threatened me that he might not get a deal for the amount I actually asked for?!!!! My answer was no deal No comission at all.
try and get as much info as you can first before you enter into any agreement with anyone.
You might wanna try an impartial financial advisor and an accountant
and read through, and you defenatly want to speak to a solictor re a will or deed of trust!!
http://search.hmrc.gov.uk/kb5/hmrc/hmrc/results.page?qt=buy+to+let before you start anything.

Do you actually wanna be a landlord? it's not all plain sailing and you need permission by your bank to let your house out if there is a mortgage on it , you also should look into landlord insurance and read up on the rules and regulations of letting.

Hope this helps , good luck
MM x

Werdnal

Newbie landlord guide here, will give you a good insight into what is required in letting:

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

If the original house that you are going to let is in your OH name only, he will bear all the tax liability on the rental income.

Is he secure enough in his employment and earning enough to pay your own mortgage and living expenses and cover the BTL payments if anything goes wrong. Whilst I am not meaning to be pessimistic, many people who look at renting out a property only see the ££££ in rent, and don't make contingency for lost rent, damage, voids in let, future employment problems, ill health etc. You also need enough in reserve to attend to maintenance and repairs promptly - you cannot tell a tenant you can't afford to repair the heating this week because the mortgage on both properties is due and the car needs MOT!

On a good day with excellent tenants everything is fine, but bad days do come along as well. You need independent financial advice on the best way to do this for your own personal circumstances, and as you say, if the worse happens and anything happens to OH, you will have to manage all these costs on your own!

Also, when owning 1 property (especially as you have kids) it is wise to have a will incase the worst happens, and when owning 2 it is even more important! Saves an awful lot of hassle when one passes on - my mum died last year and didn't leave a will, and even though they had very little savings, and rented a property, Dad still had to go through the court probate to get everything transferred to him.