Equity release

Newheight13

A few questions if anyone could advise that would be great.

We are due to remortgage in July but want to stay put until the end of the year and let our current property. Can release equity in our current property in July so we are in position to snap up another property should one come along?

Property is worth 210k and mortgage is 93K - how much could we release in July?

Would the higher land tax apply to first property as a BTL or the second property as the property we live in?

As I understand it, if we sell our BTL then we will pay capital gains tax but not on the equity it’s accumulated already? If this is the case where does the final value price come from where you would then start paying capital gains tax? Is it the last valuation from your current mortgage provider of that makes sense?

I don’t really want to be a landlord but seems a bit of a waste when the yield is around 9% with just 10 months rent. 

Thanks!  

Edi81

Newheight13 said:

A few questions if anyone could advise that would be great.

We are due to remortgage in July but want to stay put until the end of the year and let our current property. Can release equity in our current property in July so we are in position to snap up another property should one come along?

Property is worth 210k and mortgage is 93K - how much could we release in July?

Would the higher land tax apply to first property as a BTL or the second property as the property we live in?

As I understand it, if we sell our BTL then we will pay capital gains tax but not on the equity it’s accumulated already? If this is the case where does the final value price come from where you would then start paying capital gains tax? Is it the last valuation from your current mortgage provider of that makes sense?

I don’t really want to be a landlord but seems a bit of a waste when the yield is around 9% with just 10 months rent. 

Thanks!  

Others who are far more familiar with the treatment will be along but your last sentence is what calls out to me. 

Lots of private landlords are selling up as once all the costs and hassle are taken into account it’s not worth it. Never heardu of a yield over 10 months and 9% sounds almost too good!

Newheight13

Well it has a garage that we have rented out for 2 years at £200 a month and the rent easily achieves £1100 and we paid £132k for it so that is the position we are in. I know there are other cost to consider but if this isn’t a BTL that’s worth it then what is.

Edi81

Yield is calculated on property value not what you paid for it. 

Have you taken into consideration cost to get ready for rental?

housebuyer143

Newheight13 said:

A few questions if anyone could advise that would be great.

We are due to remortgage in July but want to stay put until the end of the year and let our current property. Can release equity in our current property in July so we are in position to snap up another property should one come along?

Property is worth 210k and mortgage is 93K - how much could we release in July?

Would the higher land tax apply to first property as a BTL or the second property as the property we live in?

As I understand it, if we sell our BTL then we will pay capital gains tax but not on the equity it’s accumulated already? If this is the case where does the final value price come from where you would then start paying capital gains tax? Is it the last valuation from your current mortgage provider of that makes sense?

I don’t really want to be a landlord but seems a bit of a waste when the yield is around 9% with just 10 months rent. 

Thanks!  

You can't have just 10 months rent.. You commit to 6 months and then you need to issue a section 21 to evict and should they not go they could be in there a lot longer. 

Also, you can't just convert to a BTL. You need to apply for a new loan as if you do consent to let you might as well leave it empty as they will still take it into account for affordability which will probably hinder you getting enough loan for the new place. 
 You also will need 75% for BTL so you are not talking much equity out especially when you factor in the additional 3% SDLT for the new house.

Personally I would leave it empty over renting it out.