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How can I raise funds
CEON44
Posts: 487 Forumite
Not sure if this is the right section to ask this question but here goes anyway. I currently live in a property worth about £220k, mortgage free. I plan to downsize in about 2/3 years. A smaller property which I would be very interested in has come on the market at £135k. I would love to be able to make a move for it but can only realise about £100k from savings/investments. This leaves me £35k short, without selling my current home. So I only need the £35k for about 2/3 years until I sell my current home. My issue is how can I fund the £35k. I am 62 and wife is 60. Neither of us work now, I have small pension plus carers allowance, totaling about £200 per week. My wife has about £200 per week in benefits. Her benefits are unlikely to change I think. She will also start receiving her privte pension next March. So Based on our income and the need to borrow £35k for max 3 years what options would I have?
I started out with nothing......And still have most of it left:p
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Comments
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Points to consider:
- Houses do not do well when sat empty. They are at risk of becoming damp, deteriorating generally, and attract antisocial behaviour.
- If you buy before you sell, you will need to pay the additional 'second property' stamp duty on top of your other expenses. You would only be able to reclaim this if you complete on the sale of your current house within a fixed timeframe.
In short, I would think long and hard about why this house is so special that you don't think anything like it will be on the market in 2/3 years. If it really is that special, why not just sell up and move now?0 -
Any loan would work - you may be able to get a mortgage for that little, secured on either property, but dependent on your income.Not sure if this is the right section to ask this question but here goes anyway. I currently live in a property worth about £220k, mortgage free. I plan to downsize in about 2/3 years. A smaller property which I would be very interested in has come on the market at £135k. I would love to be able to make a move for it but can only realise about £100k from savings/investments. This leaves me £35k short, without selling my current home. So I only need the £35k for about 2/3 years until I sell my current home. My issue is how can I fund the £35k. I am 62 and wife is 60. Neither of us work now, I have small pension plus carers allowance, totaling about £200 per week. My wife has about £200 per week in benefits. Her benefits are unlikely to change I think. She will also start receiving her privte pension next March. So Based on our income and the need to borrow £35k for max 3 years what options would I have?
One question - why not sell your current place in a normal chain transaction now?
If you don't, what will you do with the purchase for three years? Leave it empty? Rent it out? Use it as a second home? Think about the other outgoings - council tax, for a start, unless you rent it - which would bring in a whole raft of other questions and issues.
Don't forget you'll also need to find +3% SDLT on the purchase - just over £4k.
If you sell your old place within three years of completion on the purchase, you can reclaim that.0 -
Thanks for the answers. Plenty of things to consider that I hadnt given any thought to.I started out with nothing......And still have most of it left:p0
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You presumably can let the other house. Accordingly, you can investigate buy to let mortgages on it.No reliance should be placed on the above! Absolutely none, do you hear?0
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If you let out the new house (before moving into it in due course) then, according to HMRC guidance, you would be unable to reclaim the extra 3% SDLT paid on the new house even if you sell your current house within three years.0
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OP - why don't you downsize now and manage having a smaller property for a couple of years earlier than planned?0
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Just not possible for a few reasons. My best estimate of getting this house on the market is July 2022. Where I live the selection of properties which would be suitable for me to downsize is fairly limited. Thats why the smaller property coming on now has grabbed my interest. If I did get it I wouldnt let it out but its not far away and I could keep a close eye on it and keep it warm and aired. Yes, I realise I would be doubling up on some costs but to get the right place it would be ok.SmashedAvacado wrote: »OP - why don't you downsize now and manage having a smaller property for a couple of years earlier than planned?
I was looking at the rules for SDLT. It says you MAY get this fee back if you sell your main home within 3 years. This would be ok for me as that is the plan. But I cant find any explanation of the word MAY get it back. Does anyone know the circumstances where this would or wouldnt happen. What is the refund based on?I started out with nothing......And still have most of it left:p0 -
If I may say so, it’s a bad plan to keep a property empty for 3 years. It’s bound to deteriorate. You’re liable for council tax. The £35k loan will cost you the best part of £2k per year in interest. Utilities Bills to keep the place warm. Insurance on empty property is expensive and hard to get. These costs are fairly large compared to the 3% stamp duty.
Besides that, it seems unfair to take a home off the market.
Can I ask why you would not consider renting it out? I don’t know your local rental market, of course, but it’s likely that the rent for 3 years would cover the stamp duty several times over. Besides that the tenant would have to pay the council tax and utilities.No reliance should be placed on the above! Absolutely none, do you hear?0 -
you have been given the answer by SDLTgeek above. Does anyone know the circumstances where this would or wouldnt happen. What is the refund based on?
to reclaim higher rate SDLT you have to meet conditions:
- the place purchased has to be a main home (not a let property)
- the place sold has to have been sold within the relevant timescale
- the refund claim has to be made within the deadline for doing so having met the first 2 conditions
https://www.gov.uk/hmrc-internal-manuals/stamp-duty-land-tax-manual/sdltm09765
https://www.gov.uk/hmrc-internal-manuals/stamp-duty-land-tax-manual/sdltm09812
https://www.gov.uk/hmrc-internal-manuals/stamp-duty-land-tax-manual/sdltm098050
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