Should I buy a second home?

sheramber

Has the downturn reached the bottom in Aberdeen or could you buy a second house and end up with two houses in negative equity?

vijayrao

Thrugelmir said:

Are you mortgage free on the existing property?

 No - I am not. I still pay the mortgage on my first property. Since this is rented the mortgage is automatically taken care of. 

vijayrao said:

GDB2222 said:

Why do you want a second home? You have not really explained that bit.

 Simply as an investment( for retirement ). We also put some money in stocks and pensions. So instead of keeping cash in the bank, we thought to invest in a second home. 

The BTL boat may have sailed, but leaving that to one side why have both properties in Aberdeen?

 Good point. That's why we have the confusion and thinking if we should have a second home in Aberdeen or not. If we simply move back to our existing property in Aberdeen and don't buy a second home. would leave me keeping my savings in the bank or investing in Stockmarket. 

 The first home in Aberdeen city is in very a nice area and near to popular schools and Aberdeen hospitals so the rental demand is good for this property. 

If we move back to Aberdeen now we were thinking of buying a bigger home for us to live in. Yes, the only worry is nobody knows what is the future of Aberdeen. Will it further crash? or will Scotland become independent and so on. We are still evaluating it.

There are definitely pros and cons to it but where I am struggling is should we own two houses with a combined mortgage of around £600,000 in Scotland or should I sell in Scotland and buy 1 house in England with a mortgage of £650,000 to £750,000. 

Thrugelmir

GDB2222 said:

Thrugelmir said:

Are you mortgage free on the existing property?

The op says negative equity. 

https://www.investopedia.com/terms/m/martingalesystem.asp

Wondered why they are saving for a deposit on a second home and not paying the existing mortgage instead to address the shortfall. 

vijayrao

sheramber said:

Has the downturn reached the bottom in Aberdeen or could you buy a second house and end up with two houses in negative equity?

  Yes, That risk does exist.
 Thrugelmir said:

GDB2222 said:

Thrugelmir said:

Are you mortgage free on the existing property?

The op says negative equity. 

https://www.investopedia.com/terms/m/martingalesystem.asp

Wondered why they are saving for a deposit on a second home and not paying the existing mortgage instead to address the shortfall. 

 Rental income takes care of the mortgage payments. We are still doing a repayment mortgage. It is not a BTL mortgage. 

Thrugelmir

vijayrao said:

sheramber said:

Has the downturn reached the bottom in Aberdeen or could you buy a second house and end up with two houses in negative equity?

  Yes, That risk does exist.
 Thrugelmir said:

GDB2222 said:

Thrugelmir said:

Are you mortgage free on the existing property?

The op says negative equity. 

https://www.investopedia.com/terms/m/martingalesystem.asp

Wondered why they are saving for a deposit on a second home and not paying the existing mortgage instead to address the shortfall. 

 Rental income takes care of the mortgage payments. We are still doing a repayment mortgage. It is not a BTL mortgage. 

Are you declaring the income for tax purposes?

Ditzy_Mitzy

Snakes_Belly said:

The Midlands is a good area to live. Shropshire, Staffordshire, Derbyshire and Nottinghamshire all have some good areas where the housing prices are comparable with Scotland. Communications are good. We do tend to escape the worst of the weather. That does depend on where you live as some areas do suffer flooding. Lichfield is a nice City. The river is outside of the town so you don't get the same issues as some of the towns in Shropshire.        

The East Midlands is a nice area, indeed the southern part, Derbyshire and Nottinghamshire, is more pleasant than the northern tip of the South, i.e. Northamptonshire and Bedfordshire.  Cambridgeshire is very much a county divided, Cambridge being nothing like Peterborough and the surrounds.  

Anyway, if I understand this correctly, you already own a house in Aberdeen, which is presently let to tenants.  You are considering moving back to Aberdeen, with a view to purchasing another property in the area.  You will then occupy one and let the other.  Seems sensible enough, however you have also suggested that the housing market in Aberdeen is in decline and the house owned up there has lost value. 

That gives you a choice: wait for the let to become vacant, sell it and combine the monies with your savings to buy a single better house in the area of your choice, either England or Scotland; stay in the property game, keep the buy to let and buy something not as good for yourself in a cheaper area.  

Neither option is ideal.  The first loses money, both on sale and future income; the second provides you with inferior, we assume, living arrangements.  

What are the prospects for the let?  Will it need much spending on it in the short or long term?  How much income does it generate?  Is it paying for itself or, even, making profit?  Is being a landlord worth the time and aggravation?  

Gavin83

Any particular reason you have to live in one of the more expensive parts of England?

I live in Cambridgeshire and I bought a large 4 bed detached house recently for £430k. That's not even close to being the cheapest part of England either.

vijayrao

Thrugelmir said:

vijayrao said:

sheramber said:

Has the downturn reached the bottom in Aberdeen or could you buy a second house and end up with two houses in negative equity?

  Yes, That risk does exist.
 Thrugelmir said:

GDB2222 said:

Thrugelmir said:

Are you mortgage free on the existing property?

The op says negative equity. 

https://www.investopedia.com/terms/m/martingalesystem.asp

Wondered why they are saving for a deposit on a second home and not paying the existing mortgage instead to address the shortfall. 

 Rental income takes care of the mortgage payments. We are still doing a repayment mortgage. It is not a BTL mortgage. 

Are you declaring the income for tax purposes?

 Yes
Ditzy_Mitzy said:

Snakes_Belly said:

The Midlands is a good area to live. Shropshire, Staffordshire, Derbyshire and Nottinghamshire all have some good areas where the housing prices are comparable with Scotland. Communications are good. We do tend to escape the worst of the weather. That does depend on where you live as some areas do suffer flooding. Lichfield is a nice City. The river is outside of the town so you don't get the same issues as some of the towns in Shropshire.        

The East Midlands is a nice area, indeed the southern part, Derbyshire and Nottinghamshire, is more pleasant than the northern tip of the South, i.e. Northamptonshire and Bedfordshire.  Cambridgeshire is very much a county divided, Cambridge being nothing like Peterborough and the surrounds.  

Anyway, if I understand this correctly, you already own a house in Aberdeen, which is presently let to tenants.  You are considering moving back to Aberdeen, with a view to purchasing another property in the area.  You will then occupy one and let the other.  Seems sensible enough, however you have also suggested that the housing market in Aberdeen is in decline and the house owned up there has lost value. 

That gives you a choice: wait for the let to become vacant, sell it and combine the monies with your savings to buy a single better house in the area of your choice, either England or Scotland; stay in the property game, keep the buy to let and buy something not as good for yourself in a cheaper area.  

Neither option is ideal.  The first loses money, both on sale and future income; the second provides you with inferior, we assume, living arrangements.  

What are the prospects for the let?  Will it need much spending on it in the short or long term?  How much income does it generate?  Is it paying for itself or, even, making profit?  Is being a landlord worth the time and aggravation?  

 The income it is generating is paying for itself. With all the new rules and regulations being a landlord is not easy. I have no intention to have more than 1 BTL. 

vijayrao

Gavin83 said:

Any particular reason you have to live in one of the more expensive parts of England?

I live in Cambridgeshire and I bought a large 4 bed detached house recently for £430k. That's not even close to being the cheapest part of England either.

   At the moment my wife has a job here and kids school. Thanks for the info on Cambridgeshire. We will explore this area. Anything under £450K for 4 bed detached would be ideal for us with access to good schools. 

Thrugelmir

Sounds like your biggest issue is the property in Aberdeen. Property isn't always a great investment. The majority of people in England will have at least seen some equity generated from property ownership. Not a sunk cost.