Second property - can we simply take a second mortgage or must it be buy to let?

motorguy

Ok, brief overview of the scenario.

We are interested in buying a second property, which we have no plans to rent out, however a family member will live in it.

We have a mortgage on our current house, so for the second house will we automatically be forced down the "buy to let" mortgage route, even though no rental money will ever change hands?

amnblog

No, in fact the buy to let route is the opposite to the direction you should be going in.

Buy to let deals do not allow family to live in the property.

Caz3121

motorguy wrote: »

We have a mortgage on our current house,

will your income support the total of the mortgages?

motorguy

amnblog wrote: »

No, in fact the buy to let route is the opposite to the direction you should be going in.

Buy to let deals do not allow family to live in the property.

Ok.

So does that mean we'd be going down the second mortgage route? Thats what our preference would be.

motorguy

Caz3121 wrote: »

will your income support the total of the mortgages?

Under normal circumstances i'd say yes no problem, however i'm self employed this past 18 months (limited company but sole employee) so theres only one years accounting figures so far, so they might not allow my salary to be included?

On the plus side, we live in NI so the property is stupidly cheap. Theres a 2 bed end terrace on the market for £40K, so it might be possible to buy with a sizeable deposit and a personal loan, rather than a small mortgage.

cahillg81

Is the relative a dependent?

Most lenders inist on on owner occupier. Some will do propert for a dependent relative. Again probably one for a broker so you don't waste your time and effort looking at lenders who won't entertain you.

motorguy

I think with the questions being raised here it might be that we go down the deposit / personal loan route, if we go ahead at all.

Thanks for everyones input.

ShoesAreDamnExpensive

Don't forget to take account of the stamp duty surcharge on second homes. At £40k you wouldn't normally pay any stamp duty but as a second home you will pay 3%. Not a huge amount at £1,200 but needs to be factored in.

Old_Git

motorguy wrote: »

I think with the questions being raised here it might be that we go down the deposit / personal loan route, if we go ahead at all.

Thanks for everyones input.

another option might be to remortage your main home and release the money to buy the second home.

Pincher

Isn't there a minimum mortgage size?
Something like they won't bother lending below £30k?


I wonder if you can use the Let a Room Relief (£7,500 a year) on the second property.

I you get an increase in your mortgage for £40k, at 3% interest, so the interest is £1,200 a year. If the relative pays £2,000 in rent, and you don't pay tax on it due to Let a Room relief, it's near enough cost neutral.


If you ask for an increase on the current mortgage, they might try to gouge you for another arrangement fee.

amnblog

All leaders have a minimum mortgage size.

Arrangement fees can be a feature no matter what you do.