Getting started - buy to sell

Haz200

Looking for some guidance.  I have up to £20k to put down as a deposit on a property (buy to sell).  Both normal mortgage and bridging loans have their pitfalls - early repayment charges/higher interest rates etc.  Anyone know who the main reputable established bridging loan lenders are - I know the normal mortgage lenders tend not to get involved in buy to sell loans ?  I read varying information on the amount of deposit I would need for a bridging loan. 

fiveacre

What is buy to sell?

AdrianC

fiveacre said:

What is buy to sell?

I'm guessing the OP's planning on a short-term flip.

OP - don't forget you'd need to pay income tax on the profits. If there are any.

ProDave

I assume this is buy to renovate and sell at a profit.

Don't forget to tell hmrc you are a self employed builder will you?  That might affect what borrowing you can get.

dimbo61

Sorry if your just starting out on your property empire but it doesn't quite work like that.
£20,000 is not alot of money when buying a property which needs renovation as well.
Lenders will normally only lend on a property with a working kitchen and bathroom.
The good old days of watching homes under the hammer and a quick paint job and new cheap kitchen doors do not add £30,000/£40,000 to a property in 6 months.
Have you got experience in house renovation ?
Could you learn a trade ? 
Do you have family or friends in the trades ?
Electrician, Plumber, Gas Safe Engineer, Brickie, Builder, Painter and Decorator !

Gavin83

I think unless you’re prepared to do all the work yourself or at the very least have access to cheap labour you’ll struggle to make a profit. I’d actually expect you to make a loss on your first few so you’ll need to factor that in.

As others have pointed out there’s tax implications as well, although this could be avoided if you plan to live in it while the work is being done.

london21

20k deposit assume BTL mortgage.
depending on area and what condition of house might be a struggle.
if you do the works yourself, cheap area.
there are different flips with different structures. 
CGT etc also.

SuperHan

Gavin83 said:

As others have pointed out there’s tax implications as well, although this could be avoided if you plan to live in it while the work is being done.

No it couldn't - HMRC look at intention as well as than fact. If the intention is that you will live there for a short time and then sell, it never becomes your 'principal residence' and so doesn't get the tax relief. 

Gavin83

SuperHan said:

Gavin83 said:

As others have pointed out there’s tax implications as well, although this could be avoided if you plan to live in it while the work is being done.

No it couldn't - HMRC look at intention as well as than fact. If the intention is that you will live there for a short time and then sell, it never becomes your 'principal residence' and so doesn't get the tax relief. 

What if you intend to live there long term, do it up and then decide you don’t like it? 😉

AdrianC

Gavin83 said:

SuperHan said:

Gavin83 said:

As others have pointed out there’s tax implications as well, although this could be avoided if you plan to live in it while the work is being done.

No it couldn't - HMRC look at intention as well as than fact. If the intention is that you will live there for a short time and then sell, it never becomes your 'principal residence' and so doesn't get the tax relief. 

What if you intend to live there long term, do it up and then decide you don’t like it? 😉

Lying to the tax man rarely works well.

ProDave

Gavin83 said:

SuperHan said:

Gavin83 said:

As others have pointed out there’s tax implications as well, although this could be avoided if you plan to live in it while the work is being done.

No it couldn't - HMRC look at intention as well as than fact. If the intention is that you will live there for a short time and then sell, it never becomes your 'principal residence' and so doesn't get the tax relief. 

What if you intend to live there long term, do it up and then decide you don’t like it? 😉

You might get away with that once, but the second and third etc very unlikely.