How does buying a 2nd home affect tax credits and benefits?

worried_jim

midnight_express wrote: »

I think I might be moving up north. I'll be able to retire. Though as I live on the south coast everywhere in the UK is north of me.

I am from the North but I live on the south coast. When I retire I shall sell up my 2 bed flat, move back and buy a three bed house and with the £10xk's left over buy abroad as well and live the life of Riley! Counting down the days.

A colleague from Scarborough has been renting in Brighton and be moaning that couldn't afford to buy here so she got a transfer to Leeds, a small pay rise, and has just spent £119,000 on a three bed new build. Her mortgage is less than her old rent on her one bed. She walks around in a daze muttering that she should have done it sooner.

Damn expensive to move and live in the S.E. But if you can do it the other way.......

diymonkey

NYM wrote: »

Do you have sufficient income to service the mortgage if you intend to get one ?

To get a buy-to-let mortgage you must have a good credit record and not be stretched too much on your other borrowings such as your existing mortgage and any credit cards or other borrowings. You are likely to find it harder to get a buy-to-let mortgage unless you earn at least £25,000 a year.

The anticipated rental income will probably have to be a quarter to a third higher than your mortgage payment and rental income that is higher than your mortgage interest payment is subject to income tax.

Working tax/child tax credits can be included in the affordability criteria, but will only accepted if all named on the mortgage are the same as all named on the award notice.
Income used is the lowest figure for each kind of tax credit.

Yes, we have sufficient income to service the mortgage. Thank you for your helpful response NYM.

FBaby wrote: »

The fact you work all your life doesn't mean that those tax payers who have done the same but don't rely on tax credits to top up should support you to be able to gain a second property when they themselves can't afford to do so. Can't you see that if it wasn't for those earning much more than you supporting you to allow you to get an income closer to them, you wouldn't be able to consider what you are doing.

OH BOOHOO! Well that's life at the end of the day. What do people want me to do? sit at home on totally on benefits? would that make them more happy? At the end of the day, every tax payer, high or low earner pays into the pot (which also includes money towards tax credits!) and that pot of money is NOT simply for those who earn the highest...it's also for those who earn a low wage...if I could earn high, then don't you think I would? Unfortunately as things stand with most people, our wages are not rising much if at all and where I live, salaries have generally been on the lower-end of the scale and I have no control over this!

I couldn't give a monkeys if disgruntled higher earners say they are supporting me because I could say the same that those who earn higher, also gain a lot from TORY TAX CUTS. I don't any high-earner saying "Oh please don't give us anymore tax cuts...instead of giving us tax cuts, how about you tories help those on low wages??!"

If they are not happy about the current situation, then go complain to the government for creating it in the first place.

I paid my way through life just like every and if I'm entitled to something from the state then I shall take it, because it's my right like everyone else.

FBaby wrote: »

But going back to advice which is what you wanted. As it has been pointed out, soon, those earning a second property won't be elligible for tax credits any longer, so make sure you take this into account and consider whether in two years or so, you will be able to do without it.

Thanks for that info.

BigAunty

If/when the Universal Credit benefit system comes in, your child and working tax credits will cease (after the transition period for its implementation and assuming that the capital you have is 16k or over).

You will never qualify for any equivalent income based benefits again under UC while being a 2nd property owner with equity in the rental home so will always pay full council tax, even if your income drops.

Can you support 2 mortgages and all bills in the worse case scenario of having a void in the rental property or a nightmare tenant owing 6 months of rent at the point of eviction who trashes it, following being made redundant?

A third option is to put your nest egg in a pension - that's one of the few legal and fully legit ways to reduce capital while being able to continue to claim means tested benefits. In the past, the person paying into the pension could never withdraw much of a lump sum in the future when it matured but that's all changed. Suggest you pop over to the pensions board or see an IFA pension specialist.

nannytone_2

diymonkey wrote: »

Yes, we have sufficient income to service the mortgage. Thank you for your helpful response NYM.




OH BOOHOO! Well that's life at the end of the day. What do people want me to do? sit at home on totally on benefits? would that make them more happy? At the end of the day, every tax payer, high or low earner pays into the pot (which also includes money towards tax credits!) and that pot of money is NOT simply for those who earn the highest...it's also for those who earn a low wage...if I could earn high, then don't you think I would? Unfortunately as things stand with most people, our wages are not rising much if at all and where I live, salaries have generally been on the lower-end of the scale and I have no control over this!

I couldn't give a monkeys if disgruntled higher earners say they are supporting me because I could say the same that those who earn higher, also gain a lot from TORY TAX CUTS. I don't any high-earner saying "Oh please don't give us anymore tax cuts...instead of giving us tax cuts, how about you tories help those on low wages??!"

If they are not happy about the current situation, then go complain to the government for creating it in the first place.

I paid my way through life just like every and if I'm entitled to something from the state then I shall take it, because it's my right like everyone else.



Thanks for that info.

i was trying so hard to be sympathetic yo what you intend to do but your last post has made that increasingly difficult. 'BOO HOO'??
many people work long and hard, you aren't the exception.
it isn't the high earners that are contributing towards your tax credits you know.
a single person earning 12k a year will be contributing towards your second home. the probably work long and hard for their money too

Cheeky_Monkey

diymonkey wrote: »

Thank you for your replies.

I'm currently on working tax credit and child tax credit. I pay my council tax in full. I wanted to purchase a 2nd property as a buy to let for around £60k with about £50k on mortgage.

Not sure if it's been mentioned elsewhere in the thread but, I think you'll need a bigger deposit than that for a BTL mortgage

NYM

I can see that you previously posted under the user name worriednoob :silenced: