Buy to Let existing home and Purchase another to live in.

DE_612183

Bookworm105 said:

DE_612183 said:

The problem is I don't want to stay in the current house and I am having problems selling - market is very slow.

I also thought that increasing equity in two houses would get me to the place I want to be quicker than in one.

so why do you think that property will have meaningful equity growth over what is a rather short time period of 5 years if it is hard to sell at present?

CGT rates in 5 years time may well be harmonised with income tax rates so you could lose 40% of any equity gain to CGT 

Ah, yes good point - this was the sort of info I'm after - CGT will apply so need to be factored in - thanks @bookworm - thats helpful.

DE_612183

FlorayG said:

BTL mortgage is based on the rental value of the property not your income so you can do that. Have you looked at the local rental market? Do you know how much rent you might get and how desirable the property would be to potential tenants? Are you prepared to have the house trashed ( it happens) or tenants default on payment and can afford the outcome of that? You probably will get decent tenants but you MIGHT get difficult ones. Just renting out a house is not as simple as it was years ago

yes, at the moment rentals are like gold dust - easily get £1500 a month.

DE_612183

FlorayG said:

Also "in 5 years I'll sell both"
What if your tenant doesn't want to leave? If you end up evicting them because you want to sell you will then have an empty house you are paying mortgage on for however long it takes to sell it. You can sell it with tenant in situ but that will considerably reduce its value

Good point the BTL will probably be with a family member so should not be an issue - but I take your point it's something to bear in mind.

kempiejon

DE_612183 said:

yes, at the moment rentals are like gold dust - easily get £1500 a month.

Would such an attractive rental market make the property easy enough to sell to a landlord, you get your equity out of the house you don't want to stay in, add in your savings and buy the house you want to live in outright. Mortgage free, rid of the unsuitable property without taking on the risk of being a landlord. Without a 5 year wait.

PRAISETHESUN

DE_612183 said:

FlorayG said:

Also "in 5 years I'll sell both"
What if your tenant doesn't want to leave? If you end up evicting them because you want to sell you will then have an empty house you are paying mortgage on for however long it takes to sell it. You can sell it with tenant in situ but that will considerably reduce its value

Good point the BTL will probably be with a family member so should not be an issue - but I take your point it's something to bear in mind.

From my point of view this is actually an even worse idea - mixing family and money never goes well in my experience. Imagine a situation where you absolutely had to force eviction of your family member because you needed the property for some reason.

DE_612183

kempiejon said:

DE_612183 said:

yes, at the moment rentals are like gold dust - easily get £1500 a month.

Would such an attractive rental market make the property easy enough to sell to a landlord, you get your equity out of the house you don't want to stay in, add in your savings and buy the house you want to live in outright. Mortgage free, rid of the unsuitable property without taking on the risk of being a landlord. Without a 5 year wait.

yes, we did have a landlord to look at it - for whatever reason he didn't fancy it - not sure whether there are better returns on smaller outlays.

DE_612183

PRAISETHESUN said:

DE_612183 said:

FlorayG said:

Also "in 5 years I'll sell both"
What if your tenant doesn't want to leave? If you end up evicting them because you want to sell you will then have an empty house you are paying mortgage on for however long it takes to sell it. You can sell it with tenant in situ but that will considerably reduce its value

Good point the BTL will probably be with a family member so should not be an issue - but I take your point it's something to bear in mind.

From my point of view this is actually an even worse idea - mixing family and money never goes well in my experience. Imagine a situation where you absolutely had to force eviction of your family member because you needed the property for some reason.

yes, I understand the concerns - for a number of reasons it's not a huge risk.

SDLT_Geek

DE_612183 said:

Ok, so I've got a plan bumping around in my head - but not sure how feasible it is, so please feel free to point out the potential things that could go wrong!

My current house is worth about £450k, and I have £225k outstanding on the mortgage.

I also have about £100k in savings.

I'm 61 years old.

I was thinking of renting out my current property and using a BTL mortgage ( can you have these interest only ) so that the property will ( probably increase in value ) increase in equity over 5 years.

I'll use the £100k savings as a deposit on a new house and pay on a repayment basis on a £300k property for 5 years.

In 5 years I'll sell both and hopefully have enough to be mortgage free.

My current income is about £70k before tax - I'm guessing that on an affordability calculator the two incomes combined I would not be able to afford - but as 1 is BTL does that come into play?

Any questions / pointer please?

Would the property you are buying be in England?  If so, you would need to budget for the extra 5% stamp duty land tax. 

You would not qualify for a refund if the sale of your present home completes more than three years after you buying your new home. 

DE_612183

SDLT_Geek said:

DE_612183 said:

Ok, so I've got a plan bumping around in my head - but not sure how feasible it is, so please feel free to point out the potential things that could go wrong!

My current house is worth about £450k, and I have £225k outstanding on the mortgage.

I also have about £100k in savings.

I'm 61 years old.

I was thinking of renting out my current property and using a BTL mortgage ( can you have these interest only ) so that the property will ( probably increase in value ) increase in equity over 5 years.

I'll use the £100k savings as a deposit on a new house and pay on a repayment basis on a £300k property for 5 years.

In 5 years I'll sell both and hopefully have enough to be mortgage free.

My current income is about £70k before tax - I'm guessing that on an affordability calculator the two incomes combined I would not be able to afford - but as 1 is BTL does that come into play?

Any questions / pointer please?

Would the property you are buying be in England?  If so, you would need to budget for the extra 5% stamp duty land tax. 

You would not qualify for a refund if the sale of your present home completes more than three years after you buying your new home. 

Wales ( not England )

FlorayG

DE_612183 said:

FlorayG said:

Also "in 5 years I'll sell both"
What if your tenant doesn't want to leave? If you end up evicting them because you want to sell you will then have an empty house you are paying mortgage on for however long it takes to sell it. You can sell it with tenant in situ but that will considerably reduce its value

Good point the BTL will probably be with a family member so should not be an issue - but I take your point it's something to bear in mind.

If that's your child, sibling or parent then you will need a regulated BTL mortgage...they are more onerous and harder to get