Buying new house while keeping current

lm1981

Hi,

Our current house is worth approx £220k and we owe 80k on mortgage we are looking to purchase a property which is 350k. We had planned to sell current property but are weighing up options.

my wife and I have no debts and income of 88k together.

We have been trying to work out if we could keep current property and maybe purchase the other using equity from current. I might have my maths wrong but it looks very tight (more so from borrowing limits , monthly income / out goings seem manageable) - I haven’t really ever considered this route before , I suspect some wouldn’t even blink , it could give us a decent income in retirement (we are 30 years away from retirement).

Alter_ego

Don't forget the extra 3% stamp duty. How would you release equity?

Thrugelmir

Pensions are a far more tax efficient route of providing for retirement. 

Linton

It sounds a crazy idea to me. Are you really thinking of borrowing to buy an expensive asset for use in 30 years time when you have no idea what the market will be like then and what will happen to interest rates in the meantime?  Also you have no idea what maintenance will be required.  30 years is a long time, you can be pretty sure that major renovation will be required for it to meet the then current legal standards and tenants' expectations.

K_S

@lm1981 Related to the mortgage aspect - Assuming that you're talking about remortgaging your existing 220k to a BTL while releasing equity to use towards the deposit for an onward residential purchase of 350k, with an income of 88k it should be a very straightforward let-to-buy exercise and is not uncommon at all.

lm1981

Sorry I prob explained it badly.

the current house (owe 80k)we would move out of and we would live in the new house (350k)

so we would have approx 430k debt 

we have a little bit in savings to cover stamp duty should it come back in April , legal fees , moving fees etc

we would prob rent out the current house and we would live in the new house 

The end game would be we would have both houses fully paid for in 25 years time or sooner. So that when we retire we will have a income from house 1. (I have a pension my wife doesn’t so that’s the thinking around taking on more now to ensure we have some security in the future).

Thrugelmir

lm1981 said:

The end game would be we would have both houses fully paid for in 25 years time or sooner. 

Have you crunched the numbers fully?  Income tax for example, makes repaying the mortgage more challenging than people assume. 

lm1981

No didn’t know about any extra costs