Buying a second home/ Renting out old one

Carl2510

I’m new to this and I’ve got two years to figure more stuff out hence why I’m on this forum, basically is it worth to try rent out my current property and buy another with new money I’ve saved up or sell and have hopefully a little extra from sale? To then put towards another house, cause if I sell at least I won’t have to pay nearly 7K I’m stamp duty if I was to buy a home at 180K

Pixie5740

How long would you have to rent the current property out for to break even on the extra £7k SDLT you'll have to pay? Surely you've done the calculations to find out if the property is viable as a rental.

sheramber

If you rent out the house you own now you will have to get permission from your lender and may have to change to a buy to let mortgage rather than the residential mortgage you have now. Interest rates for buy to let are normally higher.

This will depend on your lender and the interest/mortgage position at that time. Nobody can predict that.

Any further mortgage raised on your current house would still be a joint mortgage with your brother.

Is he happy for you increase the debt on that mortgage and keep all the extra money?

Any mortgage you take out on a second house with your girlfriend will be a joint mortgage between you
two and your brother would not be involved.

Increasing the mortgage on our current house would also reduce the equity you had in that house and may affect if you could get a buy to let mortgage on that house. You need at least 25% deposit and it may be up to 40%. depending on your lender.

Nobody can tell you what will happen as nobody knows what the financial position will be in two years.

Any profit from the rental will be split between you and your brother and chargeable to tax in accordance with the tax rules at that time. Again nobody knows what they will be in two years time.

To let out a house you need to investigate the requirements for being a landlord and the various certificates you need to obtain before you can rent it out.

Carl2510

Sounds like I’m better off selling up. Guess my plan of trying to have extra income isn’t going to happen. I tried my best for someone who isn’t on a lot of money. Just need to get what I can from this house hopefully what I paid for it if not a little more. And just start again and try get the house I want with my girlfriend and put a good deposit down and just live happily ever after.

Carl2510

If my brother didn’t want to rent out the house and still live in it, would I still be allowed to buy another house?

p00hsticks

Carl2510 wrote: »

If my brother didn’t want to rent out the house and still live in it, would I still be allowed to buy another house?

You'd be allowed providing you met the mortgage criteria, which on NMW you'd probably struggle to do if you also continued to have the existing mortgage. Plus you'd have that extra stamp duty to pay.

Could your brother afford to buy you out of the existing property if he wanted to stay in it ? When you bought the property did you set up any agreement as to what was to happen if one or the other of you wanted to sell ?

Carl2510

I would get my £12K deposit back as I put all the deposit in. And anything left over would be split 50/50

Carl2510

When I get my new wage I will then be earning 21,756 before tax so I won’t be in minimum wage anymore, and I will also have my girlfriends income to add to when I get the new house so is it allowed that if I wanted to move out and get another property, yet my brother stay in the property but still have me on the mortgage I know I’ll be under strict criteria but is that actually allowed?

Pixie5740

Carl2510 wrote: »

When I get my new wage I will then be earning 21,756 before tax so I won’t be in minimum wage anymore, and I will also have my girlfriends income to add to when I get the new house so is it allowed that if I wanted to move out and get another property, yet my brother stay in the property but still have me on the mortgage I know I’ll be under strict criteria but is that actually allowed?

Why do you think it wouldn't be allowed?

Carl2510

I assumed if one of us wanted another house we would both have to move out. This might be an option if he doesn’t have to, cause at least then he can keep paying the mortgage.