Buying house without selling current house

PinkTrike

This might just be a straightforward question for a mortgage broker, not sure. I'm married. We own our house without a mortgage. My partner is a stay-at-home parent. I am the sole breadwinner. That bit is not something will change. I have been left a six figure some of money. It's not enough to buy a second house outright in the town where we live. I am wondering about moving to a larger house. I also could not afford to do this on my salary, even with the extra money without selling our house. I am 50, I have a good credit rating, so I think buying on a 15 or maybe even 20 year mortgage MIGHT be possible. Is there a way of buying without selling the property that we own? We live in a good area of a popular town (popular to live in and has lots of tourist attractions, so also popular with tourists). It would not be difficult to let our house.

Isthisforreal99

In an timewhere many are looking to get out the letting game what makes you think it's an attractive proposition for you. Do you know the first thing about being a landlord?

Flugelhorn

I think the question is why you might want to have 2 homes and let one out?

You could go ahead and buy a larger house with deposit and mortgage and then sell the current one?

Keep_pedalling

Have you allowed for the additional tax you will have to pay on the new house (5-8% depending on which part of the UK you live in) for buying a second home?

Bigphil1474

If you buy a second house now, you will pay extra SDLT (if in England), but you would get it back if you sold property 1 within 3 years. Gives you a bit of time to decide if you want to sell it or keep it. You could get a mortgage against your current property and against the new property assuming you meet affordability requirements. In a tourist area, you would likely make more income from short term holiday letting than renting out longer term. Bear in mind any local second property additional costs - often double council tax for example. Your mortgage on property 1 would have to reflect that purpose.

Definitely doable, I would do a plan of what you intend to do with property 1 and work out all the costs and how it will be managed. Owning a holiday let property can make some money, but you need to manage it and organise things like cleaning, maintenance, additional insurance etc.

ComicGeek

I would stay in the current home, and invest the money - retirement funds if you haven't already got this in place.

Stretching to a larger house will just mean larger bills and higher expenditure, and the money spent on stamp duty, moving fees, solicitors, estate agents etc is just lost money.

You need to do a proper business plan. Once you include void periods for a holiday let, or non payment of rents for a rented property, are you truely able to pay a mortgage on your new home?

Or just be content with your current home, enjoy not having to pay a mortgage, and invest the money. Might be a boring answer but that's what I would do.

Albermarle

As above, your pension maybe be a better home for your money, than property.

Unless you are not happy where you are/too small.

gwynlas

If you want to get into holiday lets then you should approach three of the largest companies to see what the demand is in your part of the country and who your potential tenants might be. They will advise on income potential and you could then decide if you wish to proceed.

A friend with a great annex was advised to consider standard lets as little demand in his area

Short term lets require a big committment regarding cleaning laundry and general maintenance all of which need to be factored into income, If a shower fails or heating breaks it requires immediate attention otherwise you are ruining someones holiday

poseidon1

Suggest you review your post of three years ago, and after some rational reflection consider whether your partner would be willing to pull his weight in assisting in what would likely be a very time consuming business venture.

Its significant that you now describe him as a stay at home parent and you the permanent breadwinner, which suggests the primary burden of setting up and managing this venture would fall on your shoulders -

https://forums.moneysavingexpert.com/discussion/6440180/redundant-husband-choosing-not-to-work

In passing, unless you plan to operate the rental via a Limited company, you should familiarise yourself with the Section 24 Finance ( No 2 ) 2015 limitation on permissible mortgage interest deductions against rental income. The penal nature of the provision, has partly been responsible for many landlords leaving the sector - see below

https://www.protax.org.uk/articles/furnished-holiday-let-abolition/

kingstreet

You're looking at a "let to buy" proposition.

Others have dealt with the landlord and SDLT situation, so I'll concentrate purely on the mortgage.

A mortgage to 70 or even 75 isn't normally an issue for a let to buy.

You would usually be able to remortgage to the lower of;-

75% of the value of the property or

the amount calculated using a lender's affordability calculator using the estimated rental income potential.

The funds from the remortgage would then become the "deposit" for your onward purchase (and cover costs and fees) together with any other funds you may wish to use. Finally, the purchase price of the onward purchase can then be supplemented by a residential mortgage which would not normally be affected by the let to buy as long as the lender for the residential would view the let as "self-financing."

As an example, if your property is worth £200,000, 75% would be £150,000. If the estimated rent is £1,500 per month, one lender suggests a maximum loan of £150,000 assuming you use a five year fix and are a higher rate taxpayer. However, if the rental income is £900 the maximum loan falls to £135,000.

Any decent broker should be able to assist you with potential loan amounts and rates based on a few simple assumptions.

p00hsticks

I live in a very popular coastal tourist town - there are lots of holiday lets and second homes currently on the market or switching to long term rentals.