Tax implications on second property

Poppyhead

Thank you all you people in the know, I'm not used to complicated financial stuff so your advice is appreciated. I've been looking online for further info but can't find a UK site with specific info, can anyone recommend a good site or a thread on this site that covers private mortgages? Are solicitors fees for doing this likely to substantially less than just paying the tax?

00ec25

Poppyhead wrote: »

Thank you all you people in the know, I'm not used to complicated financial stuff so your advice is appreciated. I've been looking online for further info but can't find a UK site with specific info, can anyone recommend a good site or a thread on this site that covers private mortgages? Are solicitors fees for doing this likely to substantially less than just paying the tax?

LOL. A private mortgage is a mortgage between 2 people who know each other, why would you a website to explain what such a mortgage is. You lend money and in return they sign an agreement to repay. You take a charge on their property as your security. It is no different at all to what any other mortgage lender does.

higher rate SDLT is +3%. So a property costing £100,000 will cost you an extra £3,000 of SDLT. You will then also have to pay CGT when you sell. There is nothing "complicated" about this at all.

no solicitor's bill is going to be anywhere near £3,000+ for drawing up a loan agreement and setting up a first charge. Anyway, how much is the property you intend to buy, if more than 100k the "saving" will be huge.

kinger101

Poppyhead wrote: »

Thank you all for your replies. I've never heard of a private mortgage but will checkout the forums as suggested, that may be the best way to go.

You've already been smart and asked the relevant questions. A number of people have posted on this thread who've bought their children property and realized they hadn't gone about it the right way after.

Crashy_Time

http://www.zoopla.co.uk/to-rent/details/44089577?search_identifier=0a84d6e29e1905b370a9074f78c4a825#sEZBgoYpEu3By7F1.97


Should be possible to save while renting, just look for the cheapest rentals, or go back home to live and save even more?

Poppyhead

Move back home? that's exactly what I want to avoid! Anyway what's the point of paying money out in rent to someone else when there's no need for it? my cash is earning virtually nothing in the bank and I have no desire to spend it on flashy goods so it might as well be put to good use. It will go to the children eventually anyway, it's just that I don't want to be seen to be favouring one over the others. I think the private mortgage is the way to go but my husband still thinks we should just take the tax hits on a second property. He may need some convincing to change his mind.

Crashy_Time

Poppyhead wrote: »

Move back home? that's exactly what I want to avoid! Anyway what's the point of paying money out in rent to someone else when there's no need for it? my cash is earning virtually nothing in the bank and I have no desire to spend it on flashy goods so it might as well be put to good use. It will go to the children eventually anyway, it's just that I don't want to be seen to be favouring one over the others. I think the private mortgage is the way to go but my husband still thinks we should just take the tax hits on a second property. He may need some convincing to change his mind.

Rents are falling, and will fall further when the Brexodus starts in earnest, that will also mean less people looking to pick up over-priced property, meaning any purchase you make now is going to lose you money, but it sounds like you are also paying your daughters rent? so in that case Hey Ho you are burning money either way. Also say your daughter decides she wants to move in a couple of years, what do you do with the 2nd property then?

Poppyhead

I've not seen any evidence of rents falling yet though it may happen. Property prices have dropped before, we were in negative equity for many years and also recall struggling when interest rates rose to 15%. Now my mortgage is paid off I fully appreciate the sense of security it gives you knowing that you have somewhere permanent to live whatever life throws at you. I'm not paying her rent. I expect Brexit will screw us all but heyho that's what people voted for.

Crashy_Time

Poppyhead wrote: »

I've not seen any evidence of rents falling yet though it may happen. Property prices have dropped before, we were in negative equity for many years and also recall struggling when interest rates rose to 15%. Now my mortgage is paid off I fully appreciate the sense of security it gives you knowing that you have somewhere permanent to live whatever life throws at you. I'm not paying her rent. I expect Brexit will screw us all but heyho that's what people voted for.

Good reason to hold onto your cash at this point IMO.

Crashy_Time

Poppyhead wrote: »

I've not seen any evidence of rents falling yet though it may happen. Property prices have dropped before, we were in negative equity for many years and also recall struggling when interest rates rose to 15%. Now my mortgage is paid off I fully appreciate the sense of security it gives you knowing that you have somewhere permanent to live whatever life throws at you. I'm not paying her rent. I expect Brexit will screw us all but heyho that's what people voted for.

London posters on HPC are getting excited about this sort of price level http://www.rightmove.co.uk/property-to-rent/property-60585862.html people in other parts of the country are just rolling their eyes, but I wouldn`t underestimate the downward pressure on rents that is coming, all over the UK

missprice

Crashy_Time wrote: »

Good reason to hold onto your cash at this point IMO.

Huh? Why hold onto cash when OPs house is paid for and she has money sitting in the bank.
Can't be made homeless when you own outright.
If interest rates go sky high again, doubtful, then she can put the rest of her cash in a high interest account and any money from the private mortgage as it comes in can be added to same account.

Why pay rent to anyone if you can help it?