Second property dilemma

KoalabeardUK

Hello all!

I am strongly considering purchasing a second home and then renting out my existing home that is currently mortgage free. My idea is to remortgage our current home and use that money to put towards our second home and use our savings to purchase the new house outright.

Another option is to just purchase the second new home with a completely new mortgage, rent out our first home (which will still be mortgage free), keep our savings and use the income of those to put towards paying down our new mortgage. (our savings are in an ISA so will be Tax free)

What are your thoughts please? I'll contacting a financial advisor of course but interested to hear some initial thoughts.

Thank you!

user1977

What has led you to "strongly" consider this rather than use your money for something else? How much understanding do you have about starting a letting business?

Scotbot

Why invest in property instead of stocks and shares?

KoalabeardUK

user1977 said:

What has led you to "strongly" consider this rather than use your money for something else? How much understanding do you have about starting a letting business?

Hello

We are wanting to up size to a bigger new family home.

ThisIsWeird

KoalabeardUK said:

Hello all!

I am strongly considering purchasing a second home and then renting out my existing home that is currently mortgage free. My idea is to remortgage our current home and use that money to put towards our second home and use our savings to purchase the new house outright.

Another option is to just purchase the second new home with a completely new mortgage, rent out our first home (which will still be mortgage free), keep our savings and use the income of those to put towards paying down our new mortgage. (our savings are in an ISA so will be Tax free)

AfaIk, and that isn't very, if you remortgage your current home and rent it out, won't you need a (higher rate) BTL mortgage? Or at least some negotiation of the mortgage terms. I'm pretty sure you cannot simply remortgage it as your main home, even partly, and then rent it out. I guess it's because it adds to the bank's risk.
I suspect the best method would be to use as much of your savings as you can as the deposit for your new home, coupled with a normal mortgage for the rest. But I don't know how current ISA rates compare with mortgage interest. Does one beat the other? If so, then lean more on the 'one'

MeteredOut

KoalabeardUK said:

user1977 said:

What has led you to "strongly" consider this rather than use your money for something else? How much understanding do you have about starting a letting business?

Hello

We are wanting to up size to a bigger new family home.

Tens of thousands of people do that each year. That, in itself, is not typically a driver to become a landlord, especially for someone who is asking probably the most basic of questions.

propertyrental

No one can advise without a fully worked out budget?

What costs are involved?

what mortgage rate?

what could the cash earn elsewhere?

What income do you expect (gross)?

What income (net)?

Also how knowledgable are you regarding a lettings business? Training?

Which country is this (laws vary)?

Your post is worryingly superficial for what is a huge investment decision.

edit: and how many threads here have you read - they highlight many of the issues LLs face.....

pieroabcd

You should also consider that the SDLT on second homes is very high, so much that you could end paying the house more than its market price.