Buying a 2nd property advice.

Optimisticnihilist77

Hi,

I bought my family home approx. 15 years ago and currently share it with my retired mother and brother. I'm solely responsible for the mortgage but my mother and brother contribute to bills and general upkeep etc in lieu of rent.

The mortgage on the family home mortgage is almost paid off completely, with savings put aside to pay it off in full before the current term is up and the interest rates increase massively.

I used to split my time equally between the family home and a rented apartment in London close to my work's head office. At the start of the year the rent on the apartment increased by 25% so I decided to end the tenancy and save instead while looking for somewhere else to rent.

The rental market is not realy an option anymore so I'm now thinking of buying a second home nearer my office to use as my main residence and letting my mother and brother continue living in the family home rent free. (They'll cover all bills etc)

I'm aware that 2nd property purchases are subject to higher stamp duty and much higher deposit expectations (20-25%) and planning with this in mind.

Does anybody on here have any similar experiences or any other advice they can share?

I'm wondering if it would be better to pay off the current mortgage first and have the family home as an unencumbered property before starting looking for a second home?

Or should I keep the current mortgage as is and enquire about extending/increasing the existing mortgage to cover a second purchase? (not sure if this is even possible/realistic)

Is there anything else I should be aware of regarding buying a 2nd property and letting my family live in the other etc?

Thoughts welcome. Thanks in advance.

Richard1212

As someone who owns more than one UK home for personal use only ( not including other properties to let)----the sort of statement that causes friction on this forum---- I found no problem at the time of purchases and none since then. If you can afford it, you can have as many houses as you wish, for your own use or to rent out.

But of course you are allowed a "main " residence and the others, for personal use, are impacted by Stamp Duty and Council Tax ( though, re the latter,sometimes not fully in some council areas); and usually by CGT when it comes to selling. You would need a second mortgage at a higher interest than the norm and a deposit of at least 25%. You can't just add to the existing mortgage remaining on your current main residence ( as I understand it) .

But, of course, if you pay off the existing mortgage you have already, you'd get a much better deal on a brand new mortgage unencumbered by an existing mortgage. 

Above all, everything depends on your financial circumstances. If you can afford it, you can do pretty much what you want when it comes to buying houses.  Good luck and happy hunting----you seem to have a pretty good arrangement in mind.