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  • FIRST POST
    • Simon Moneysaving
    • By Simon Moneysaving 6th Mar 18, 7:45 PM
    • 2Posts
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    Simon Moneysaving
    Advice on buying a second home
    • #1
    • 6th Mar 18, 7:45 PM
    Advice on buying a second home 6th Mar 18 at 7:45 PM
    I own my current property for outright, and now looking to move to a bigger property.

    I have saved a small deposit and keen to keep hold of my current property and rent it out.

    Looking for advice on best way to do this..

    Should i remortgage current property to increase deposit or keep that separate and use the rent to top up mortgage payments?

    What are the text implications and stamp duty with second home?

    All advice welcome
Page 1
    • new_owner
    • By new_owner 6th Mar 18, 9:16 PM
    • 211 Posts
    • 75 Thanks
    new_owner
    • #2
    • 6th Mar 18, 9:16 PM
    • #2
    • 6th Mar 18, 9:16 PM
    +3% Stamp and possibly CGT when/if you sell your none main residence
    • enthusiasticsaver
    • By enthusiasticsaver 6th Mar 18, 9:20 PM
    • 6,617 Posts
    • 13,917 Thanks
    enthusiasticsaver
    • #3
    • 6th Mar 18, 9:20 PM
    • #3
    • 6th Mar 18, 9:20 PM
    Buy to let is no longer as attractive as it used to be due to recent stamp duty and tax changes.

    From 2020 landlords can no longer use mortgage interest to offset profits made from rental income meaning that more tax is due. How much depends on your tax status and other income.

    There is a 3% surcharge on stamp duty for second homes. Whether you are able to avoid this depends on whether you can designate your new home as your main residential home in spite of the fact you still have your current home.

    From the sound of it you are going to need to take out two mortgages as presumably the new bigger home is more expensive. To raise a bigger deposit you will need a buy to let remortgage on your current home which is usually more expensive.

    You need to consider the usual pitfalls of owning second properties, bad tenants or tenants who dodge paying rent or gaps between tenancies meaning no rent and of course repair costs etc etc.
    Debt free and mortgage free and early retiree. Living the dream

    I'm a Board Guide on the Debt-Free Wannabe, Mortgages and Endowments, Banking and Budgeting boards. I volunteer to help get your forum questions answered and keep the forum running smoothly. Any views are mine and not the official line of moneysavingexpert.com. Pease remember, board guides don't read every post. If you spot an illegal or inappropriate post then please report it to forumteam@moneysavingexpert.com
    • Simon Moneysaving
    • By Simon Moneysaving 6th Mar 18, 9:29 PM
    • 2 Posts
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    Simon Moneysaving
    • #4
    • 6th Mar 18, 9:29 PM
    • #4
    • 6th Mar 18, 9:29 PM
    Thank you some great points raised.

    If I can avoid 2 mortgages and just use savings as deposit on new house. What implications does that have?
    • silvercar
    • By silvercar 6th Mar 18, 10:05 PM
    • 37,310 Posts
    • 157,180 Thanks
    silvercar
    • #5
    • 6th Mar 18, 10:05 PM
    • #5
    • 6th Mar 18, 10:05 PM
    Thank you some great points raised.

    If I can avoid 2 mortgages and just use savings as deposit on new house. What implications does that have?
    Originally posted by Simon Moneysaving
    No mortgage interest as an expense (though recent changes this benefit is reducing for higher rate payers over the next few years).

    No other difference.

    ------

    You started 2 identical threads that I have now merged.
    I'm a Board Guide on the Debate House Prices & the Economy, House Buying, Renting & Selling, Mortgages and Endowments, In My Home incl DIY, Overseas Holidays & Student boards.
    I volunteer to help get your forum questions answered and keep the forum running smoothly.
    Board guides are not moderators and don't read every post. If you spot an abusive or illegal post then please report it to forumteam@moneysavingexpert.com. Any views are mine and not the official line of moneysavingexpert.com.
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