Help with my situation . . . . . . please !

Mehullakhani

Hey guys

Am looking to buy a flat within the next few months. I work for a hospital and they give me free accomodation until end of july. I would ideally like to move into my new place by then.

I am looking for a flat about 250,000 - 300,000 . I am very fortunate in having approx 200k for a deposit. I can get a max mortgage of about 180k ; but am looking to take out just enough mortgage to make up the difference between my deposit and the cost of the flat.

I also have another property in kent, which I dont really want to sell. The council in the area are desperate for property for council tennants, and they will pay £650/month rent guaranteed for 3 or 5 years.

Anyway, I am a bit confused over what to do

What type of mortgage should I take out; hopefully I will only have a small mortgage, and I want to overpay loads every month - because I will be getting rental income from my kent property . What is the best type of mortgage to take out - fixed, tracker, variable ?? Any recommendations ?

Thanks for all your help guys !

R

Mehul

herbiesjp

For your property you will only need a £50k or £100k mortgage then

Provided your income is sufficnet then this should not be a problem.

Is the Kent property mortgaged?

Walletwatch

Mehul

I agree with you that you should probably go for a mortgage only to the extent of your requirement. I think, given your requirement, you should negotiate for the cheapest plain vanilla mortgage (read that as non-offset), without any prepayment penalties associated.

meanmachine_2

wow - a 200K deposit?! You're in an enviable positon my friend.

Yep, get yourself down to your high street independent mortgage broker and ask for a variable without payment penalties. Oh, and watch your broker's eyes bulge when you tell him how much deposit you've got!

That'll make his day. Normally their day is spent struggling to stretch an FTBer's non-existent salary to the max.

Mehullakhani

Ok, so I am looking for a variable mortgage - isnt that a bit risky if interest rates rise ? Should I look for a 2 year fixed mortgage or something. Which mortgage lenders are best for overpayment, and best ofr re-calculating it in my advantage if you sort of get what I mean . ? ?

Thanks

Mehul

slater14

Mehul,
As the other posters have said,

You really need to speak face to face with an advisor or the lenders directly. Your position is so strong they should be batttering down their rates against each other to get your business.

Fixed Rates, Capped, Introductory Rates etc etc. should not apply to you. You will no doubt get a "special" rate for the size of deposit you are putting down....These products always have a sting in the tail (as they say, there's no such thing as a free lunch).

I presume your Kent house is on a BTL and not still in your name as your private dwelling?

Rent - this is even better as it shows to lenders an additional form of income....dont forget you've got tax to pay out of that £600 p.month! Possibly at 40% (depending on your income).

Mehullakhani

Ok, this is where I need some more advice from the experts here . . .

The property in kent is not 'technically' in my name . The flat was owned by my late mother, and because of her will etc etc actually belongs 50:50 to my two uncles ( her two brothers ). The lease is still in her name, as I havent had a chance to get it converted over yet .

My uncles have no interest in the property, and will be more than happy to sign it over to me. However, could it be advantageous to leave it in this sort of state of limbo ? Or should I put it in my name ? Are there any tax advantages/disadvantages ?

R

Mehul

slater14

Mel,

You need to talk to a very good accountant.

My understanding is this - if you rent the property out the taxable income will need to be declared and paid to the inland revenue.

DO NOT for one moment underestimate the tax man.

If they cannot find you - they will put charges against the property and sell it under you. They have draconian powers to seize assets for outstanding tax.

The common loophole you may have heard about is Charitable Trusts - this doesnt avoid paying Income Tax, but should help your family avoid paying CGT on your death.