Advice on buying a second home

Simon_Moneysaving

I own my current property for outright, and now looking to move to a bigger property.

I have saved a small deposit and keen to keep hold of my current property and rent it out.

Looking for advice on best way to do this..

Should i remortgage current property to increase deposit or keep that separate and use the rent to top up mortgage payments?

What are the text implications and stamp duty with second home?

All advice welcome

new_owner

+3% Stamp and possibly CGT when/if you sell your none main residence

enthusiasticsaver

Buy to let is no longer as attractive as it used to be due to recent stamp duty and tax changes.

From 2020 landlords can no longer use mortgage interest to offset profits made from rental income meaning that more tax is due. How much depends on your tax status and other income.

There is a 3% surcharge on stamp duty for second homes. Whether you are able to avoid this depends on whether you can designate your new home as your main residential home in spite of the fact you still have your current home.

From the sound of it you are going to need to take out two mortgages as presumably the new bigger home is more expensive. To raise a bigger deposit you will need a buy to let remortgage on your current home which is usually more expensive.

You need to consider the usual pitfalls of owning second properties, bad tenants or tenants who dodge paying rent or gaps between tenancies meaning no rent and of course repair costs etc etc.

Simon_Moneysaving

Thank you some great points raised.

If I can avoid 2 mortgages and just use savings as deposit on new house. What implications does that have?

silvercar

Simon_Moneysaving wrote: »

Thank you some great points raised.

If I can avoid 2 mortgages and just use savings as deposit on new house. What implications does that have?

No mortgage interest as an expense (though recent changes this benefit is reducing for higher rate payers over the next few years).

No other difference.

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You started 2 identical threads that I have now merged.