How much deposit is required for 2nd home

Hi,

If we move and leave 25% equity in our only and current home that we’ll rent out, how much deposit is required for the 2nd home that we will live in?

Will we need to pay the higher stamp/land tax on the 2nd home we live in, or the first house we bought that we’ll rent out?

Thanks

Replies

  • silvercarsilvercar Forumite, Ambassador
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    If you are increasing the number of properties that you own then you will have to pay higher sdlt on the new property. Nothing to pay on the existing property as you are not buying it.

    How much deposit you require depends on how much you can borrow. 

    If you are not married, you could consider putting one property in each name, if income is sufficient to get the mortgage on the new property.
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  • ACGACG Forumite
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    It wont be a second home if you plan on renting out your current home. 
    The new home would likely need to be converted to a BTL (or Let to Buy), that property would probably need 25% equity in it - but maybe more with the current rental calculations. 

    The new property would just be a normal purchase so probably 10% in the current climate. Although some lenders have slight quirks with second properties, I think Nationwide for example need 20%. 
    I am a Mortgage Adviser
    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.
  • Newheight13Newheight13 Forumite
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    Thank you both - I think what I’m confused about is I would need to pay the higher rate of land tax on the new property (400k), that we would live in and not the one we currently live in but would let out? So if we bought them in a different order then the higher rate would have applied to the 200k rather than the 400k if that makes sense? 
  • Soot2006Soot2006 Forumite
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    Thank you both - I think what I’m confused about is I would need to pay the higher rate of land tax on the new property (400k), that we would live in and not the one we currently live in but would let out? So if we bought them in a different order then the higher rate would have applied to the 200k rather than the 400k if that makes sense? 

    You pay the higher rate on the second property. So, yes, if you owned a 400k property and purchased a second property for 200k then then the sltd would be due on the 200k.  But you already own that one and have already paid your taxes as required on that one, whatever they were at time of purchase.
  • ACGACG Forumite
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    You do not pay stamp duty on a property you already own. You would have paid that at the time if it was applicable. 
    Stamp duty is only payable (where applicable) on the new property. 
    I am a Mortgage Adviser
    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.
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