Pre-Mortgage Advice.... Please

Aiadi

Thinking about buying a second small house to be nearer to my work. Only have around 20K for a deposit and taking the current financial climate into account what do you think I should do (be free to let me know if you can think of other viable options). My current flat is worth about £170-180K and I have around 110K outstanding on its mortgage.

1) The first option would obviously be to sell and move which has the advantage of getting me a decent deposit but the disadvantage of losing a property.

2) The second would be to rent the flat but this would leave me with a very small deposit (looking at around 350-400K properties). One way I was thinking of increasing the deposit would be to remortgage the flat but is this possible while at the same time applying for a second mortgage and will this not make a dent into my mortgage allowance by increasing my debt?

Finally could anyone give guidance on whether increasing the deposit would reflect on the mortgage allowance? or does it only make a difference to the interest rate that one could get?

Thanks in advance for any guidance.

UK007BullDog

How much do you earn before tax a year?

How old are you?

Any other debts?

Will it be just you on this mortgage? If not, need details too of the other person.

Aiadi

UK007BullDog wrote: »

How much do you earn before tax a year?

How old are you?

Any other debts?

Will it be just you on this mortgage? If not, need details too of the other person.

Thanks for the rapid reply.
My income is around 40K and my wife earns about the same amount. the flat's mortgage is in my name. I am 35 and we have no other debts apart from my wife's student loan of about 10K. I wouldn't mind having a sole or joint mortgage.

homer_j_3

As higher rate tax payers, you would have to consider the tax implications of a second home.

Personally, I would look to sell the first flat as I believe these properties are going to be hit hardest in the next 12-18 months. Buy your home nearer work and if you are happy with the tax situation and want a 2nd home, look for one in a years time when the climate will be more certain.

Aiadi

homer_j wrote: »

As higher rate tax payers, you would have to consider the tax implications of a second home.

Personally, I would look to sell the first flat as I believe these properties are going to be hit hardest in the next 12-18 months. Buy your home nearer work and if you are happy with the tax situation and want a 2nd home, look for one in a years time when the climate will be more certain.

Thanks for the reply. I will definitely keep this in mind.