What would you do in my situation? Residential mortgage and 2 x BTLs

niknak888

Hi all,

 I currently have 2 buy to lets and a residential mortgage which are all up for renewal 

within the next 12 months, however i'm not sure what to do, so I wanted to ask what you would do in my situation.

BTL Property 1, outstanding mortgage balance £235k - value £400k , currently rented at £1700 p/m ,fixed rate ends end November 2025

BTL Property 2, outstanding mortgage balance £200k, value £400k, currently rented at £1990 p/m, fixed rate ends end of March 2026

Residential property, outstanding mortgage balance £65k, value £700-750k, fixed rate ends end of September 2025

I'm currently unhappy with my current detached home and have been for over 10 years and want to move, rather to go through the hassle and time to get planning and dealing with trades people etc.

To move to a detached house in the area I want that has the spec i'm after, will be approx £750k- £1 mill

The stamp duty and fees for moving will be approx 50k-80k

My idea was to remortgage property 1 back to 75% LTV and pull out 65K of equity, for which I'd use to pay off my residential mortgage and be mortgage-free. 

I'd get another interest-only mortgage for 300k for approx £1100 per month on a 4.5% interest-only mortgage.

Next, i'd remortgage property 2 back to 75% LTV and pull out 100K of equity and get a mortgage for 300k for approx £1100 per month on a 4.5% interest-only mortgage.

I'd use the 100k to add it to my £725k and have £825k to buy a new residential property. I would be willing to take on a small mortgage if needed.

In the unlikely scenario whereby if I found a property for under £700k, then I would have some money leftover to invest?

Are there any other questions, thoughts or considerations you would take into account if you were in my situation?.

Thank you in advance for your feedback

anselld

BTL 1 gross yeild is 5.1% and you are proposing to borrow at 4.5%.  Not much of a margin and any significant cost, void, etc could easily push you into a loss.  You are almost entirely reliant on future price growth.   So why not sell BTL1 to fund the move.

Or sell both BTLs and be mortgage free after the move.

Hoenir

What would your CGT liability be if you sold BTL 1 ? 

niknak888

Hoenir said:

What would your CGT liability be if you sold BTL 1 ? 

Not sure what the cgt would be as i think it's not that straightforward to calculate it.

House is split 50/50 with my partner.

Originally purchased for 205k in 2011, as a residential property and lived there for 2 years before converting to 75 percent btl and moving to current house.

Ive remortgaged the house, three to four times since living there.

The outstanding mortgage is 236k on it and current 1.99 perxent,due to expire at the end of November. if the house sold for 400k, that's 164k profit minus any expenses like selling fees etc.

Possibly 22 percent cgt on 164k?

Alternatively, if I remortgaged at 300k, pulled out 64k tax free and then sold it later for 400k, I think I'd only pay cgt on the 100k minus any expenses but I could be wrong.

niknak888

anselld said:

BTL 1 gross yeild is 5.1% and you are proposing to borrow at 4.5%.  Not much of a margin and any significant cost, void, etc could easily push you into a loss.  You are almost entirely reliant on future price growth.   So why not sell BTL1 to fund the move.

Or sell both BTLs and be mortgage free after the move.

Considered selling btl as its a 2 bedroom house and I don't think it will rent for much more than the current 1700. Only issue is calculating cgt on it and deciding if its worthwhile doing it,compared to remortgaging and taking some money out tax free and then make slightly less profit,while still having an asset.

If i was to buy a 400k property as a buy to let,I'd pay Stamp duty of over 25k.

Many things to consider and weigh up:(

anselld

niknak888 said:

Hoenir said:

What would your CGT liability be if you sold BTL 1 ? 

Not sure what the cgt would be as i think it's not that straightforward to calculate it.

House is split 50/50 with my partner.

Originally purchased for 205k in 2011, as a residential property and lived there for 2 years before converting to 75 percent btl and moving to current house.

Ive remortgaged the house, three to four times since living there.

The outstanding mortgage is 236k on it and current 1.99 perxent,due to expire at the end of November. if the house sold for 400k, that's 164k profit minus any expenses like selling fees etc.

Possibly 22 percent cgt on 164k?

Alternatively, if I remortgaged at 300k, pulled out 64k tax free and then sold it later for 400k, I think I'd only pay cgt on the 100k minus any expenses but I could be wrong.

CGT is completely unrelated to mortgage, so remortgage cannot possibly reduce your liability.

ReadySteadyPop

niknak888 said:

Hi all,

 I currently have 2 buy to lets and a residential mortgage which are all up for renewal 

within the next 12 months, however i'm not sure what to do, so I wanted to ask what you would do in my situation.

BTL Property 1, outstanding mortgage balance £235k - value £400k , currently rented at £1700 p/m ,fixed rate ends end November 2025

BTL Property 2, outstanding mortgage balance £200k, value £400k, currently rented at £1990 p/m, fixed rate ends end of March 2026

Residential property, outstanding mortgage balance £65k, value £700-750k, fixed rate ends end of September 2025

I'm currently unhappy with my current detached home and have been for over 10 years and want to move, rather to go through the hassle and time to get planning and dealing with trades people etc.

To move to a detached house in the area I want that has the spec i'm after, will be approx £750k- £1 mill

The stamp duty and fees for moving will be approx 50k-80k

My idea was to remortgage property 1 back to 75% LTV and pull out 65K of equity, for which I'd use to pay off my residential mortgage and be mortgage-free. 

I'd get another interest-only mortgage for 300k for approx £1100 per month on a 4.5% interest-only mortgage.

Next, i'd remortgage property 2 back to 75% LTV and pull out 100K of equity and get a mortgage for 300k for approx £1100 per month on a 4.5% interest-only mortgage.

I'd use the 100k to add it to my £725k and have £825k to buy a new residential property. I would be willing to take on a small mortgage if needed.

In the unlikely scenario whereby if I found a property for under £700k, then I would have some money leftover to invest?

Are there any other questions, thoughts or considerations you would take into account if you were in my situation?.

Thank you in advance for your feedback

The next 12 months could possibly be the worst in a long time to re-mortgage and sell, I wouldn`t make assumptions about value and profit just yet, I think you should just decide if you want to be a landlord or not and move ahead on that basis. When you bought the properties will be the main deciding factor in how much profit you could make because borrowing rates have risen so much.