Mortgage Buying Advice

NP1975

Hi.

My wife and I are looking to buy our first home together, a property valued at around £150,000.
I own a house, valued at around £90,000. She has approximately £40000 for a deposit.
Question:
What would be our best approach? (Just looking for a general idea as to how to proceed.)


Be gentle, I'm a complete novice!

Kind Regards,
N & R

hazyjo

Are you going to sell your house?

NP1975

If I have to.
That was something I was also curious about. Is there a way to use my house without selling it? Or is that daft!

P.S. It's currently being rented.

Cheeky_Monkey

NP1975 wrote: »

If I have to.
That was something I was also curious about. Is there a way to use my house without selling it? Or is that daft!

P.S. It's currently being rented.

What do you mean use your house?

Don't forget that if you keep it, you will have to pay the extra 3% stamp duty.

Mahsroh

When you say use your house, are you talking about remortgaging and releasing equity? Might prove tricky on a buy to let. I assume you have a mortgage on it at the moment?

Plus as you own that property you would have to pay an extra £4500 stamp duty (based on £150k) purchase price.

In your position, i'd be inclined to use the £40k for your deposit / moving costs) and get a mortgage for around £120k (assuming that's affordable) and keep the existing property as an asset / revenue stream but without more info on your rental income / mortgage etc on that property it's hard to say for certain.

NP1975

I own my house outright. No mortgage. It brings in £485 per month.

It may prove wiser to keep it bringing in money.

Mahsroh

In that case, if you're happy to pay the extra 3% stamp duty (you'd probably get that back within 2 years in rent allowing for expenses & income tax).... I personally would keep the asset and the revenue stream from the rental income, and use the £40k as deposit / moving costs / stamp duty and take out a residential mortgage on your new property.... assuming that's affordable for you.

But that's just me. I'm sure others on here would say the exact opposite and recommend you sell up and end up with a very small mortgage on your new property.

One thing I 100% wouldn't do though, is take a mortgage on the existing property to fund the purchase of your own property. Lenders might not be keen on that anyway, but if they did give you a buy to let mortgage in those circumstances, you'll pay a higher rate of interest than you would on a residential mortgage, and rules around tax relief on mortgage interest are changing too which could negatively impact you.

NP1975

Thank you for the advice.