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Answer to complex mortgage question

molliemc86
molliemc86 Posts: 2 Newbie
Fourth Anniversary
in House buying, renting & selling
Hi all - does anyone know if you can use one house as a deposit on another? Husband (H) and I currently live with my parents. H has a residential mortgage on a house he is renting out. There is currently no equity in the property. What is left on the mortgage and what the house is worth is roughly the same. We are soon to come into some money, and along with our savings we would have enough to pay H's mortgage off in full, but if we do that we wont have enough left as a deposit and stamp duty on a new place. (Pls note we cant live in husbands house - its miles away, and we are reluctant to sell it as prices have fallen massively and neighbouring houses aren't selling)

I was thinking if we pay the mortgage off on husbands house, could we then use that as a deposit against a new house?

Thanks xxx

Comments

  • MissMollyJ
    MissMollyJ Posts: 85 Forumite
    No - you would be better off paying off most of the mortgage and keeping some back as a deposit.

    Otherwise you’d have to take out a nee mortgage on the rental after you pay off the mortgage which is a bit convoluted and unnecessary.

    What a lovely position to be in :)
    £2 Savers Club 2020 no. 9
  • Slithery
    Slithery Posts: 6,046 Forumite
    Eighth Anniversary 1,000 Posts Name Dropper Photogenic
    Not complex at all.

    Yes, if you pay off the mortgage you could then remortgage it to provide you with deposit. But surely it would be easier to just keep the current mortgage and use the cash as your deposit?
  • anselld
    anselld Posts: 8,738 Forumite
    Part of the Furniture 1,000 Posts Name Dropper
    You cant use a house as a deposit.
    Either part pay the mortgage and keep enough money for the deposit, or keep the whole mortgage and use all the money as a larger deposit.
  • Thrugelmir
    Thrugelmir Posts: 89,546 Forumite
    Part of the Furniture 10,000 Posts Name Dropper Photogenic
    molliemc86 wrote: »
    Pls note we cant live in husbands house - its miles away, and we are reluctant to sell it as prices have fallen massively and neighbouring houses aren't selling

    Sounds like good reasons to bite the bullet and cut your losses.
  • AdrianC
    AdrianC Posts: 42,189 Forumite
    Eighth Anniversary 10,000 Posts Name Dropper
    molliemc86 wrote: »
    Hi all - does anyone know if you can use one house as a deposit on another?
    No, but you can release any equity (by increasing the mortgage) and use that.
    Husband (H) and I currently live with my parents. H has a residential mortgage on a house he is renting out. There is currently no equity in the property. What is left on the mortgage and what the house is worth is roughly the same. We are soon to come into some money, and along with our savings we would have enough to pay H's mortgage off in full, but if we do that we wont have enough left as a deposit and stamp duty on a new place.
    So... how about using part of the money as deposit/SD (inc +3%...) on your new home, and pay down part of the BtL mortgage on the rest.
    (Pls note we cant live in husbands house - its miles away, and we are reluctant to sell it as prices have fallen massively and neighbouring houses aren't selling)
    Lovely, an' all, but is it a profitable business? Or are you subsidising your tenants on top of failing to crystalise the capital loss?
    I was thinking if we pay the mortgage off on husbands house, could we then use that as a deposit against a new house?
    Reduce the mortgage, then remortgage to borrow back some of the money you just paid the loan down...?

    <head explodes>
    It's far easier just to not pay as much of the mortgage in the first place...
  • caprikid1
    caprikid1 Posts: 2,590 Forumite
    Part of the Furniture 1,000 Posts Name Dropper Combo Breaker
    Lets not forget, if you pay off the mortgage you are pumping more money into an already failing venture.


    All the time the mortgage is high you are reducing your tax exposure. Pay down the mortgage and pay more tax ?
  • kingstreet
    kingstreet Posts: 39,445 Forumite
    Part of the Furniture 10,000 Posts Name Dropper Photogenic
    What you are describing is called 'cross-charging' and it has not been available since One Account stopped accepting new business about five years ago.
    I am a mortgage broker. You should note that this site doesn't check my status as a Mortgage Adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice. Please do not send PMs asking for one-to-one-advice, or representation.
  • Crashy_Time
    Crashy_Time Posts: 13,386 Forumite
    10,000 Posts Seventh Anniversary Name Dropper
    kingstreet wrote: »
    What you are describing is called 'cross-charging' and it has not been available since One Account stopped accepting new business about five years ago.

    In that case what is the solution?
  • kingstreet
    kingstreet Posts: 39,445 Forumite
    Part of the Furniture 10,000 Posts Name Dropper Photogenic
    See posts 2, 3 4 & 6 Crashy.

    I added a footnote to a finished thread for anyone else searching later.
    I am a mortgage broker. You should note that this site doesn't check my status as a Mortgage Adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice. Please do not send PMs asking for one-to-one-advice, or representation.
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